When entering new and exciting relationships, we might tend to get a little too OVERexcited and OVERlook things we shouldn’t, such as our money! While it is difficult going from a single financial plan to a double financial plan, with two independent people coming together, there are certain mistakes I can help you to overcome and stay the hell away from!
Underestimating living expenses especially when purchasing a new house. With the housing market booming, young couples are spending more than ever on their first house. The monthly mortgage payment can be deceiving as there is the extra house maintenance, property taxes, insurance, extra furniture, utilities, not to mention any renovations. Most young couples don’t leave enough room in their cash flow to build up an emergency account or set aside money for retirement. When going into a house purchase, use conservative numbers and leave a cushion in your cash flow for repairs, renovations, and emergencies.
Not having a student loan strategy. Student loans are like a mortgage for graduates these days. With the stimulus packages, a lot of people with student loans have been able to avoid payments. But they should not be avoided for too long! Put together a strategy that works with your budget, with your timeline so you don’t waste years paying it off and pay thousands of dollars more in interest. What can you afford extra each month to pay?
Identify saving buckets as a couple! Most people have different views and beliefs on money. One partner might be very short term focused and another might be long term focused. One might be slender and the other a saver. Without a common plan to bring the couple together, their finances will tear them apart. Begin to get on the same page, learn how to understand each other’s perspectives, and begin to money date one another. As a couple, sit down on a monthly basis to build out your money goals. For each goal open a bank account, investment account, or retirement account to begin saving for it now! Speak with a financial advisor to help find the right account and investment for you!
Not taking advantage of compounding interest! The sooner you begin investing, the less money you’ll actually have to save up for retirement. Doesn’t matter the amount you begin with, just begin and make it consistent. Even if it’s 1% of your income, start today. Then increase it by a percentage every few months. Before you know it, you’ll be maxing out your retirement account and taking full advantage of any employer match.
Not protecting against risks! Life insurance, disability insurance, estate plans, it’s not the sexy side of financial planning, but protecting assets is even more important than growing them. It’s like replacing the old furnace with a new one when you want to renovate your master bath. Infrastructure can be more important than the visuals. Do a review of all your current insurance from home and auto to disability to life insurance. Work with a financial advisor to see what gaps you have and how to build a solid financial plan to cover all the pieces of your life, including your loved ones. Work with an estate attorney to build an estate plan that can grow with your family as you add children, with your assets as you build your net worth, and with your business if you have one.