For many newlywed couples, combining finances can cause a lot of friction. When I'm teaching couples about merging their money, I like to say that if I were the treasurer for our family, we'd all be buck naked.
The Fed recently signaled that an interest rate hike is likely to come in the near future. The equities markets have continued to climb regardless of global fears and poor earnings.
Q: Was it hard to put so much of your money mistakes on paper? A: People usually put the best of themselves out there; I wanted to put the worst of myself out there.
Entering the real world in your 20s is thrilling, but far from simple.
On top of navigating the job-search process and learning the ins and outs of renting an apartment, you have to figure out what to do with your first paychecks.
To help, weve rounded up the smartest things 20-somethings who are just starting out their careers can do with their money:
By Ted Halpern
Learn more about Ted on NerdWallet’s Ask an Advisor
A money date may sound like the nerdiest, least romantic thing you could possibly do for Valentine’s Day. But money is involved in almost all of the choices we make in life, so even if it’s a little geeky, such a discussion can be a great way to achieve more of your goals with your partner, transforming money from a source of stress to a powerful tool.
Your financial life is like a business you manage with your spouse or significant other. You may take on debts to finance an opportunity, have goals you want to achieve, and complete daily responsibilities. Yet few couples review their financial statements as a business owner does.
If cash were sitting on the sidelines while a huge debt loomed over a company, or a CEO didn’t have a plan for future growth and investment, shareholders would not be happy. But you and your partner are both the shareholders and executives of your life together. You have complete freedom to set and achieve your goals.
A check-in to define those goals and regularly take stock of your progress is a valuable tool to make sure you are on track. Whether you call it a “money meeting” or a “money date,” here are a few helpful tips to help it run smoothly.
Agree on joint goals and write them down.
Give a set period of time (perhaps three or four minutes) for each of you to write down your goals. Don’t talk or allow any other interruptions. Then categorize your individual goals as follows:
- Short-term (under a year), such as vacations, medical expenses and gifts
- Medium-term (1 to 5 years), such as car purchases and paying off debts
- Long-term (5+ years), such as creating and preserving wealth together
When the time is up, compare and discuss your individual goals to create a shared goals list. Some may be very important to your partner, even if they are less of a priority to you. With the final list, develop a plan to achieve the goals. You should plan to reach short-term goals and most medium-term goals by saving. Goals with a long time horizon can be reached with an investment strategy.
Keep (some) emotions out of it.
This is not the time to place blame or stir up old arguments, but a certain amount of emotion can be motivating. What are you passionate about, and to what lengths will you go to make sure certain things happen? Use your passion and strive to improve in the future as opposed to focusing on the past.
Agree on a plan and individual responsibilities.
What are you going to do to make your goals happen? What is the highest priority, and how much money should be allocated to various goals? Set deadlines for yourself, and decide who is going to take certain actions.
And remember, a goal without a deadline is merely a wish.
Automate as many steps as possible.
Make the right decision easy and the wrong decision hard. For example, you can overcome the natural tendency to spend now rather than save for later by using automatic bill pay and automated savings online. If you have to move money from account to account to buy something that is not in your plan, that may be enough of a barrier to make you think twice.
Keep yourselves accountable by meeting periodically to review how your spending and saving match up to your written plan. If you aren’t quite on track yet, how can you make the process easier? The time period for your check-ins should line up with your goals; for example, you could meet to review short-term problems such as overspending monthly or quarterly and review your investment strategy and planning for big-ticket items once a year.
Key questions to ask in a money meeting:
- How does our spending compare with our plan?
- Can we find additional savings, such as shopping around for insurance or cable-Internet-phone packages?
- Are we saving enough to achieve our goals?
- Were there any unexpected setbacks since our last meeting, and how can we catch up?
- Which tools or professional advice will help us achieve our goals?
The bottom line
If you have a good process, you will find that being a good steward of your money becomes a habit, and you will meet your financial goals more easily. May your next money meeting help you get closer to the one you love and to meeting your shared goals together!
Ted Halpern is the president of Halpern Financial in Maryland and Virginia.
Image via iStock.
Frustrated Greek bank customers wait to get into a branch after a three-week account freeze. The OBR is designed to avoid such lengthy freezes for Kiwis should a bank collapse here.
More money. $3.6 billion to be exact. That is the amount of additional tax revenue Gov. Wolf wants from you to fund his tax and spend budget. To that I ask, “How dare he?”
Although his budget address to a joint session of the General Assembly on Feb. 9 was lacking specifics of his 2016-2017 budget proposal, the reality is that Gov. Wolf is continuing the tax and spend theme presented last year.
Two Monsanto executives returned their lavish bonuses, amounting to nearly $4 million, after the agribusiness giant agreed to pay federal regulators $80 million as part of a settlement over accounting violations.
By Jacquiline Pack
When you first start a formal job, nothing beats the feeling of having your salary in your bank account and imagining all the things that you can spend it on. It is easy to live in the moment because the future seems very far away. But it is absolutely vital to start planning from the very beginning.
You may think you want to wait until you are earning more money to start saving, but as you get older, you will have to take on more expenses. If you do not get into the habit of saving and investing towards a sound and stable financial future from the very beginning, you will find it very difficult to do so later.
To take control of your finances, you need to think of the kind of lifestyle you want to lead now, and how you will maintain that lifestyle in the years to come. Work out your short-term (one year), medium-term (three to five years) and long-term (retirement) goals, and then give careful thought to what you need to do now to achieve all of these.
Think about your luxury items and entertainment expenses and work out which of those you really need.
It is important to have fun now, but it is also important to make sure that you can afford your lifestyle. You should still have dinners and go out with friends, but consider whether you really need additional luxuries like designer clothes that you will only wear a couple of times.
Then write out a budget that takes all these expenses into account, making sure you think of all possible expenses, from the insignificant daily takeaway coffee to the whopping car repairs you have to afford twice a year.
Smokey Robinson’s song “You Better Shop Around” was really about his mother’s advice about how to find true love in life.
While it’s absolutely true that you need to take incredible care with the decision on who you will take as your partner in life, the advice also applies to our financial lives. Sometimes when we shop around, we find unexpected opportunities.
One of my friends noticed that her monthly automobile insurance bill went up slightly, from $95 to $115. It wasn’t a ton of money, only $20, so she put off making the call to the insurance company to inquire what had happened. But then a friend of hers was getting a new car and offered to sell her his previous car for $500.
Now I have to admit that I became envious when she was telling me this because I would have loved to have a Honda Civic with 160,000 miles for only $500, but that’s not the main point of this story. With the new vehicle, she had to call the insurance company because she had to get the car insured. She determined that she only needed the Personal Injury Protection on the second car. But now she qualified for the multi-car discount, so her new monthly payment for both cars was $94, which was less than her previous insurance bill for only one car.
Sometimes it depends where you buy something. I’m a huge fan on Amazon Prime because I get free two-day shipping on everything, which means I usually don’t have to go shopping, which I really don’t like. I could happily live for the rest of my life and never go into a shopping mall. But sometimes the lure of getting it online actually costs more. I’m pretty particular about my hair care products so when I find a product that works, I stick with it. I found my shampoo online so purchased some with the assumption that I had saved money versus buying it at the hair salon. But to my surprise at my next hair appointment, I had actually paid more. So now I’m buying the giant size of my shampoo and using it to fill up the regular size bottle, which saves even more.
Online shopping does bring some great opportunities to comparison shop. Customer reviews can provide insights into others’ real life experiences. Some sites offer feature comparisons between different brands, which is very helpful as we are trying to make cost/benefit trade-off decisions. And now that most of us have smart phones, we can be comparing what’s available online at multiple sites while we are at the physical store.
Another benefit of technology is access to coupons, which can be great money savers. Whether you are shopping at home or in the store, be sure to check to see if there are discounts available for the store or item that you are purchasing. But be cautious about buying something you don’t really need just because you have a coupon.
But no matter where or how we are shopping, it’s still important to stick within your budget. Buying impulses can seize us anywhere. So we have to be mindful of what it is we need. I find it helpful to make a shopping list when I’m going online for my purchases to help me avoid unnecessary purchases. Retailers are excellent at getting us to spend more by giving us “rewards” for certain purchases. Just like any other purchase, getting the reward only makes sense if it’s something that you actually want and need. Otherwise, you just spent money that could have gone to a better use.
Martha Cox is chief strategy and development officer for Jacksonville’s Family Foundations, and her column runs every other Wednesday in the Times-Union. firstname.lastname@example.org.