May 02 2008
Money in, Money out….
I’m newly married and my wife and I just bought a house… Needless to say we are facing new expenses that we aren’t used to. I’m coming to a point were I’m scared to spend the way I used to spend when I was single… or even when we were engaged… Does everyone feel the same way that’s been in my shoes? It’s like I’m questioning every single purchase I make! Its definitely not fun to do, but needed… at least until we get into the swing of paying our mortgage and utilities along with whatever else is up ahead for us….. Some advice that I’ve received is to log everything that you buy for a month or two, create categories according to your spending and then allocate an “allowance” for each category that you have. Another piece of advice that I found to be great was to do a 60/40 split on your finances. This is basically where you save 40% of your income and live off of the remaining 60%. So that means all of your bills (mortgage, utilities, car note, credit card bills, etc…) should all be payable by 60% of your income per month. The other 40% should be broken up as follows:
10% - 401k or some kind of retirement fund
10% - Long term savings. Something you wont touch for a long time until a big purchase comes around like a house, or college for kids or something of that nature
10% - Short term savings. This is for unexpected expenses like repairs for your car or medical bills. It can also be allocated for vacations or gifts during the holidays.
10% - fun money. This is basically whatever you want to save up for or to just have a fall back stash.
Another piece of advice that I got, which I’m semi weary of is to get multiple credit cards (if your financially responsible) and divide them up to different categories of expenditures. So basically get a very low interest credit card for big ticket items that you do not plan to pay off in the near future and get a credit card with “rewards” (which usually means higher interest rates) that you will pay off in full at the end of each cycle.
Does anyone else have advice or input on financial planning for couples that are just starting out? I think we all could benefit from some good advice!
I’m not sure that getting multiple credit cards is the answer. There are lots of folks who try to play the “game” with credit cards, but its quite risky, especially since you have many other finances that you are dealing with and have to manage.
My suggestion is that you definitely continue to throw money into your 401K. I also suggest you set aside some money for a ROTH IRA, as its a good retirement investment.
As far as managing your expenses, i say that you create a monthly budget on an excel spreadsheet and track your DAILY expenses (you can find some budget templates online). On the 20th day of every month, you will get a good sense of what you have remaining within your budget for leisure items. Even better, you can save this money and put it away. If you have extra money, it’s not always good to throw it away just because you have extra. Save it for a rainy day.
Hope this helps.
Stay away from credit cards! Its the easiest thing to turn to when you need a quick monetary fix and can quickly turn into a big problem. I say if you get one, stick to one credit card with Zero fees and ALWAYS pay the balance off each month.
I would stick to the IRA that your workplaces provide and not sink any additional money into it outside of that. Do the maximum percentage to whatever your employer offers. You can’t touch that money til your 65.
I try to stick to the 80/10/10 rule. 80% for bills and spending. 10% for tithing to churches and charities and 10% for savings.
Your first year is gonna be tight with all the furniture/electronic payments. The key is once those things are paid off to stay disciplined. Once your purchases are paid for…store the money you would of used as a furniture payment into savings or investments.
Another good card to have is Ameican Express. Charge it and pay the whole thing at the end of the month and no interest. Buy only what you can pay off except for the big investments such as car etc.