Successful Budget Planning for Newly Wedding Couples — 5 Key Questions to Ask
You do need plenty of conversation as a couple to determine your personal and financial goals. With financial flexibility as the key to long-term happiness in the 21st century, how do you and your spouse want to live? You may, for example, choose to pursue the traditional American Dream of a big house, fancy car, and country-club membership. But through budgeting planning process, a married financial family will come to realize the trade-offs involved—and what you may not be able to achieve if you pursue your primary goals.
Before putting pencil to paper, explore the following questions with your spouse:
What kind of house will satisfy you? Although the last several decades have brought financial turbulence, one constant remains: Your home likely will be the largest purchase you ever make. Thus, it goes without saying that you and your spouse should have detailed discussions about your housing plans.
There are options here. Some couples might prefer to spend less on a house and more on travel. Others plan to entertain frequently and likely will be spending most of their time at home. Or they may anticipate having relatives living with them, either permanently or for extended periods. Therefore, they want a spacious, well-appointed home.
These are vital issues for you to consider because they relate directly to your ability to reserve and allocate resources for your other lifetime goals. The bottom line on house selection is this: The more money you spend on your home, the less you’ll have for other objectives.
How will you get around locally? We’re talking here about your transportation needs. How will you get from here to there? If the answer is by car, the transportation category could be the second most expensive in your budget plan.
Couples who live in major metropolitan areas with superior transit systems (such as New York City and Chicago) may be able to use public transportation to and from work, shopping, and recreation, renting cars only for those special travel occasions. This may be a less expensive option than purchasing and maintaining automobiles, but it’s simply not available for many couples.
If public transportation isn’t an option in your situation, will you need two cars, or can you get by with one? Remember: Being able to afford two cars isn’t the same as needing two cars. As part of your discussions about transportation, you’ll want to explore which part of your local travel needs can be met by public transportation, car pooling, and any transportation resources that your employer or employers may offer.
Are you planning a family? Although you may not be ready to answer this question in detail (that is, how many children you want and when they might come along to be left for future marital discussions) it’s still wise to factor in the concept of family budget planning. Your dreams of raising a family in the future can be a key determinant in how you structure your spending today.
For example, if your plans for the next few years include starting a family, you may want to abstain from such major purchases as an expensive home, knowing that you’ll need a sizable portion of your budget for raising your children. Remember, too, that starting a family can affect your revenue side due to you must take family budgeting as well. During your child’s first few years, is one of you likely to put your career on hold to stay at home? If that’s the case, your income and spending are the ability to undertake major influence purchases could be dramatically reduced.
What are your favorite leisure activities? Personal budgeting planning isn’t about abstaining from the things you enjoy. It’s about developing the wherewithal to do these things more often. Is your favorite leisure activity travel? Dining out? Volunteering with civic and nonprofit groups? Identifying the activities that you and your spouse enjoy will allow you to specify the costs involved with your preferred activities. Do this, and you can incorporate these costs into your family budget basic plan.
There’s an additional benefit here as well. If you and your spouse are doing the things you most enjoy, you’re more likely to build the strong bonds that are the basis of every successful marriage.
When do you plan to retire, if at all? Our parents and grandparents didn’t have to plan for a huge retirement nest egg; statistics told them they wouldn’t be around for very long following their retirement. The same is hardly true today, when the typical couple might need enough money to support themselves for about 35 combined post-retirement years. Clearly, financing your Golden Years requires a fair amount of gold.
Many people today covet an earlier retirement. They expect to remain vigorous and curious for several post-retirement decades, and they’d like to travel and explore new possibilities. Financing that active retirement requires expert planning over a lengthy period. Conversely, now that we’re living longer and staying healthier in our later years, many people choose to keep working well past the age of 65. Some even use their Golden Years to explore new education and career options. This trend has been reinforced by the realization that older people make excellent employees. They’re seasoned, they’re reliable, and they can serve as mentors for younger staff. According to the U.S. Census Bureau, the American workforce in March 2001 included more than 4.45 million people 65 and older, representing 13.7 percent of all Americans in that age group. And, with more than 5.1 million workers between the ages of 60 and 64, the number of seniors at work is sure to swell.
A decision to keep working past the customary retirement age has implications for your budget plan. You won’t need to allocate as much of your budget to savings, and you’ll be able to count on additional income in your later years.
As you consider these five key questions about your good budget plan as a couple, keep in mind that each decision involves trade-offs. A large house today means less money available to raise a family. Early retirement implies a greater emphasis on savings. It’s vital for you and your spouse to establish a general consensus on reaching financial goals, so that the inevitable trade-offs don’t become sources of resentment as the years pass.