MANY OF you have recently taken the big jump and got married. After you return from your honeymoon one of the smartest things you can do is get a grip on your finances. This will allow you to keep your marriage magical with weekend getaways, nights on the town or spontaneous gifts while still being able to save money. It is very challenging, but you will be able to live well if you prioritise your spending based on the five C's of martial financial bliss: communicate, choose, combine, commit and cherish.
COMMUNICATE
This is the beginning. Without communication there can be no combining, choosing, cherishing or committing. It is important that, even before you take that walk down the aisle that you both discuss your approaches of handling money. Determine who the 'spender' is and who the 'saver' is. It is also important to develop some guidelines for resolving differences and be able to come to a unified decision. When you have arrived at this point, it will then be time to hammer out financial goals.
CHOOSE
Now that there is communicating, it is time to choose what matters most to the both of you. Identify the most important aspects of your current life, and what you will want to achieve together in the future. This is the first step of your budgeting process.
Record what you 'must' spend on (utility bills, mortgage, groceries) and also a list of 'fun' things you would like to spend on (facials, movies, travelling). Of the fun things decide what brings the greatest enjoyment, and then identify ways of doing them economically. Estimate a dollar figure for both "must" have and "fun" items. Add them and derive a total expense figure.
COMBINE
Now that you know your total expenses you must combine your individual incomes in order to get a true picture of your financial strength as a couple. This will enable you to establish a realistic budget and stick to it. It will also help to reduce the possibility of "living beyond your means." Another technique newly wed couples can utilise is to consolidate credit cards. Use just one. Another common technique is to use one cheque book instead of two. It will be easier to track your finances this way. Now that you have subtracted your expenses from your combined incomes, the difference represents the amount of money you will have to invest in order to attain your future goals and dreams.
COMMIT
Invest this money into an investment vehicle. Not only will you be creating wealth, but you will also get into the "investing habit" - which should last as long as you both shall live. By investing a consistent amount of money on a regular basis into growth instruments such as mutual funds, you have the potential of achieving significant capital appreciation.
Saving consistently and regularly may sound easy, but it can get challenging. Rising gas prices and utility costs with stable salaries usually results in the inability to acquire all the items that you desire. This is where the commitment comes in.
Try the principle of 'paying yourself first' which is withdrawing 10 per cent of your combined gross incomes and using this amount for investing purposes. Another way to stay committed is to focus on the goals that you are investing toward, such as a home, a car, furthering your studies or expanding the family.
CHERISH
When the Joneses are buying jacuzzis and big screen TVs, it's tempting to keep in step. Likewise when living expenses rise, it's easy to save less or even "borrow" from our savings account. It's the natural thing right? We need to be content however in whatever circumstances we are in. Challenge yourself to take your eyes off someone else's toys and to reflect upon everyday blessings. Be thankful for what you have, especially each other.
For additional information, please contact the Wealth Advisory unit of NCB Capital Markets or you may reach them at 1-888-4WEALTH or info@ncbcapitalmarkets.com.
