Financially Wise Couples

 

Achieve Financial Wisdom by the following:

Income Plan:

Given these economic times it is wise for working couples to live off of one salary and bank the other. It is doable and will decrease stress if one partner gets laid off or needs to go on disability.

Share Debt:

Couples should view each other’s debt as both partners’ responsibility. School loans, credit card debt, car payments are the couple’s responsibility, regardless of who or what the money was spent on.

The goal is to get out of debt as soon as possible in order to maximize savings. Think of it this way: a couple that pays together stays together.

Savings Plan:

Both partners may not be on the same page savings wise and that is okay. Have a certain amount of cash equally allocated to each partner for disposable spending.

If there is a tightwad in the couple that partner can feel free to save the majority of his or her disposable income, the same freedom goes for spendthrift spending. The idea is that this behavior is budgeted into the big picture, which is overall spending and saving. Looking back at the end of the month, all the bills should be paid and savings made.

Common Goals:

Couples need to have a common view of where they want to be financially by the time they retire. If one is content living off the land in a hut in Bali then that is going to need different planning than a partner who wants a city condo in addition to a year round country home with a boat.

Negotiating and agreeing on common goals at the beginning of couple-hood can secure future financial dreams.

Protect Yourselves:

When both partners are working, living off of one income is a great strategy. And when one partner is not working, the other partner should be allocating funds into separate retirement funds. This is especially true for a stay at home parent, as a precaution in case of separation.

Contributions to an IRA that can be deducted automatically from the working partner’s paycheck (with permission of course) can provide additional security in future finances. While it is true that retirements funds are split 50/50 in most divorce cases, establishing separate retirement funds is a strategy that insures peace of mind.

Frugal Fanatic Tip:

Cash is never a bad thing. Having a few thousand in a savings account is a good measure in case of an emergency i.e.: flying home for a funeral, renting a car for a few days if a car breaks down, staying in a hotel, because the roof collapsed.

But, keeping more then a few thousand in a savings account is like flushing money down the toilet. In a savings account, the maximum interest rate is low compared to other options like a certificate of deposit (CD). In case of a real emergency, CDs can be cashed in fairly easily. Emergencies like these are most likely not going to happen and if they do then the small fee for cashing out a CD will be the last thing to worry about.