Personal Finance Tips for Newlyweds NEW YORK (LowCards.com) June is a popular month for weddings, but that makes this also the time to set household budgets and establish financial priorities.
Many couples begin marriage with one or both partners in debt from student loans or credit cards. According to a TransUnion study, student loan balances increased 75 percent from 2007 to 2012, and the average debt per borrower now stands at $23,829. In addition, the average credit card debt per borrower was $5,122 in the fourth quarter of 2012.
Here are some financial tips for newlyweds:
- Before you get married, know how your future spouse handles money. Even if you agree on almost everything, don't assume your spouse shares your beliefs about money. Pay attention to how and where the money is spent.
- Before the wedding, reveal everything about your finances, including income, debts, giving and retirement accounts. Share your bank statements from the past 12 months. Explain your strengths and weaknesses with money and whether you function as a spender or a saver.
- Each of you should get a copy of your credit reports from the three credit bureaus. This will give you a clear picture of credit accounts, debts and how creditors will judge you. Aim to get your scores over 750 to receive the lowest interest rates for your first mortgage and other loans. A low credit score has a widespread effect on interest rates, insurance premiums and employment. Nearly 47 percent of employers use credit checks when making a hiring decision, according to a 2012 survey by the Society for Human Resource Management.
- If your partner has been married before, find out about the financial obligations to the ex-spouse and children.
- Have a wedding and honeymoon you can afford. Do not start a life together charging thousands of dollars in wedding and honeymoon expenses to your credit card if you can't pay it off within a year.
- If both of you work now, live on one salary and save as much as you can of the second income. This helps prepare for income interruptions in the future such as starting a business, changing careers, returning to school or starting a family.
- Avoid credit card debt. If you can't pay for something with cash, you can't afford it.
- If you have a credit card balance, pay as much as you can above the minimum each month. If you get gift money, a bonus, a second job or a tax refund, use this to pay off your debt. You can even make micropayments multiple times during the month to pay off your balance faster. Eat a meal at home and apply the money you save immediately to your credit card balance.