You’ve adjusted your accounts to what works for you, you’ve agreed on a budget you both can live with and tackled the issue of earning discrepancies. You’ve put your plan into action and now that some of your financial goals have been accomplished like an emergency fund and saving for retirement, you’ve probably started brainstorming a few more. Here are a few next steps to help you make it to your golden anniversary in happy financial bliss.
First Thing’s First
Which, out of all of your fiscal goals between the two of you are you to achieve first? For example, Is it paying off your partners debt from earning their MBA or sending your child to college? While these carry different emotional importance to each of you, they also carry different financial impacts on your budget. They are both equally noble goals. The bottom line, however, is purely a math equation. Let the simple, logical math be the decision maker in what you prioritize as your next financial goals. Purely based on numbers it is most likely that paying of the debt first would make more logical sense. Paying an interest rate that’s say, 10% on your loans is something that you owe now, where as paying into a college savings fund may be only accruing 7% interest of potential earnings. It makes sense to save money by paying the higher financial burden off first. There is a slew of situations where a simple mathematical comparison can save a lot of argument or torture over what's the right decision.
Agreeing on what kind of insurance and how much coverage you need can be tricky. Again, just how opposites tend to attract financially, same goes with cautiousness. There is usually a partner who feels more comfortable with a greater amount of protection. It's important to keep in mind that life insurance isn’t about what you feel you need, it's about what would make those you left behind feel secure. Having a large portion of income cut off can be a huge financial burden on your partner. In the very least funeral or medical costs should be covered, but anything else to which your paycheck would have contributed, too.
Movin' on Up
Somewhere along the line it is likely that one of you will get that big promotion and along with it a nice fluffy raise! Cheers! While this is good news all around, it means another discussion about financial priorities. While to one of you a bigger raise means added spending money to the budget and a bump in quality of life, to the other it might mean more to put away for a rainy day. Again, there is middle ground. Start with what you agree on. With your Retirement, Emergency Fund and paying off debt all adequately covered, consider where you’re already making some progress. Maybe put your money towards something that’s lacking. Something that your house has needed for years, or even a relocation. A large chunk of it put away to accrue interest for college or even pay off your car. Starting with where you have common ground is always a good start. But by all means, make sure you put it in your budget to celebrate all of your partner’s hard work that’s paid off!
So go forth and be merry and married in happy, blissful financial harmony! Can there ever be such a thing as a fairy tale ending for financing? No, just as love and partnership isn’t exactly like the movies, either. All the hard work and compromise is behind the scenes. Its all about communication and eventually all your financial efforts could seem, well, effortless.
WandaFears, Realtor ABR CRS GRI WCR
Richmond, Va. Long and Foster Realtors