Know these financial milestones for marriage.
As you and your spouse bring your lives together, your finances will play a key role in how you plan out your shared future. The timeline of your marriage can be segmented into periods, where you aim to make financial progress together. Reaching certain milestones should be part of your short- and long-term savings plan. Here are some achievements that you can start working towards to help set you both up for a secure financial future.
The first 5 years of marriage
Pay off your student loans
The average student debt for 2016 graduates is a record $37,1721. If you’re like countless others who carry debt from your education, make a plan to erase yours within five years through careful budgeting and responsible spending. Shop around to see if another loan with a lower interest rate can be used to pay off your student debt.
Have an emergency fund
In case one or both of you are ever laid off—or faced with unforeseen medical or home expenses—depending on your personal financial situation experts suggest having at least three to six months’ worth of living expenses set aside2 (or more if you work in a high-risk industry where layoffs are common).
Purchase life insurance
It’s easy to dismiss life insurance as something you won’t need until you’re older, but getting into a policy when you’re young may end up costing you less in the long run. As you add more expenses to your lives, like a mortgage or the cost of raising a child, acknowledge the reality that if one of you dies, the other will need to continue without the support system you’ve established together. So, don’t wait—the average annual premium of a life insurance policy increases exponentially the older you get.
After 5 years of marriage
Buy a home
Depending on where you live, buying a home as newlyweds could be feasible or it could take a few more years to prepare for. Either way, real estate is usually a valuable asset and an investment goal that most married couples work towards. If you plan to live somewhere temporarily or property taxes are prohibitively high, well, there’s more to prepare for. Speak to a real estate expert in your area if buying a home is an important milestone for your marriage, and be realistic with when and what you can buy.
Save for your child’s education
If a child is a part of your family plan, education costs are an expense you should prepare for as early as possible. Look into your state’s 529 college savings plan to see if it offers additional tax benefits or look into alternatives that charge the lowest fees. It’s cheaper to start saving for college now than it is to take out a student loan when you need it later on.
“Experts suggest having at least three to six months’ worth of living expenses set aside.”
After 10 years of marriage
Establish your retirement fund
Start contributing to your retirement fund as early as possible, so your savings will be established when you need it. A common guideline is to put 15% of your income into retirement. This isn’t possible for everyone, but it’s a relevant goal. Online calculators can help you determine how much you’ll need to live comfortably after you stop working, but it’s still subjective. Learn all you can about 401(k) and IRA options, or other workplace retirement accounts. If your employer matches your contributions or supports in other ways, take advantage of that.
Prepare and sign a will*
This can be done as early in a marriage as you want, but it becomes more important as time goes on. By the time you’re a decade into marriage, you should have a health care power of attorney granted to someone, and your will should be well organized and updated regularly. Speak to a lawyer or do some online research to figure out the best way to have a will prepared for you. It’s likely easier than you think—yet less than half of Americans have a will in place, so make it a priority to organize your assets and create one for the ease and benefit of your loved ones.