Combining Money Pointers for Newly Married Couples – Daily Flash Briefing

Combining love, lives and laundry is one thing, combining your money is another.

Newly married couples who both work have to think about what to do with two incomes. Here are some pointers.

New couples usually wonder how to improve their finances. Easy. Start talking about your money as “our” money and plan as a couple

Once you marry and support one household with two incomes, shift your thinking. You don’t bring in two incomes now — you bring in one bigger income that opens financial planning doors.

Different life events require planning. Early marriage before kids — and their expenses — is the perfect time to use combined income to ramp up retirement contributions/debt and to build an emergency fund.

Thinking about starting a family in a few years? Children bring expenses would-be parents can’t imagine before they actually become moms and dads. Set up your budget so one spouses’ income between now and then goes towards bills and monthly living expenses, and allocate the other income towards other financial priorities, such as paying down debt, building savings and planning for retirement.

The formulas and planning change after kids arrive. One parent might stay home, for example, take extended parental leave, or return to work only part-time.

Daycare swallows a lot of income. With both parents working full-time and paying daycare’s rising costs, a couple often just breaks even. Recent reports site that daycare consumes almost a third of one income in a two-income home. And, in some places, a year of daycare costs more than a year of public college.

Remember that spending all of both incomes before kids makes any of all of these options impossible.

Ask each other questions. If having a family stance to change how much time you spend at paying work, talk about this with your spouse before children and start planning as a couple.

Ask each other:

• How will things change once we have a baby?
• What is our ideal scenario?
• How can we move one step closer to our ideal scenario?

For example, if student loans weigh on you emotionally, figure out how much more you can allocate toward your debt each month. Investigate if you qualify for student loan forgiveness programs, too. Several exist now for certain types of workers.

Don’t ignore retirement completely. If having a parent stay at home matters most, focus on saving for retirement now so your retirement assets grow while one parent isn’t working.

Don’t forget spousal individual retirement accounts, which allow the working spouse to contribute to the nonworking spouses’ IRA or Roth IRA. To qualify for spousal IRA contributions, you must file a joint tax return. Spousal IRAs are also subject to the same annual contribution limits, income limits and catch-up contribution provisions as traditional IRAs.

Couples who are able to live off of one income ensure less stress and enjoy more flexibility with their budget. They create options and opportunities for their family situation, and taking the time to plan gives them peace of mind.

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