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Budgeting advice for newlyweds and new couples

Tackling Debt In Your First Year Of Marriage: Tips From A Top Financial Expert

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Dec. 17 2020, Published 2:55 a.m. ET

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Creating a budget, discussing financial goals, tackling debt— as if you aren’t busy enough your first year of marriage! Financial stress is one of the top reasons that couples fight, which potentially leads to long-term issues. Although it may seem a lot to take on while still settling into being a Mrs., your first year of marriage is an important time to create good financial routines and set goals together. 

Aligning on finances and tackling debt together is crucial for the first year of marriage. Americans have an average personal debt of $90,460 according to an Experian survey, and a newly married couple can double that number. So what are the keys to tackling debt early and just discussing money openly with your partner? 

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Talk About Finances Before Getting Married

Creating a budget as a couple

Personal finance is pervasive, said Nathan Tribble, president and chief compliance officer at Stockpile, a fintech startup. It seeps into many other aspects of life— when you’ll have children, where and how you’ll live, how often you’ll travel, when you’ll retire, to name a few.

So before you even get married, have a frank discussion about finances with your partner. Are you savers or spenders? How much debt do you have? What are your long-term goals? Having this conversation will make sure you’re on the same page before the wedding. 

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“Get comfortable having conversations about money and personal finances,” Tribble advised. But if the topic is too emotional, he suggests finding a financial advisor who can give advice tailored to your situation. This will allow you to get custom, granular advice, and having a neutral arbiter takes some of the emotion out of the conversation. 

Why Is It Important To Tackle Debt As A Newly Married Couple?

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Making progress paying down debt early is emotionally freeing and can have a huge impact on the rest of your life and the decisions you make as a couple. Not having the stress of monthly payments frees you up to think about what you want to pursue earlier in your marriage and career. It also puts you in the position to take more risks that you might not be able to take with thousands of dollars of debt. 

Paying off debt early also makes mathematical sense, Tribble pointed out. It’s hard to make progress on your investments while you’re holding debt. Ultimately, “the benefits of getting debt free outweigh the short-term pain of having to tighten the belt to pay it down,” Tribble said. 

Strategies For Paying Down Debt

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There are many schools of thought about how to pay off debt— some swear by starting with the highest interest debt first, others champion paying debts smallest to largest. Ultimately, the secret to personal finance is to just do it, Tribble said, and to pick a method and stick to it. 

Tribble compares personal finance to physical fitness. The mechanics of losing weight are usually pretty straightforward, but the difficult part is having the discipline to follow through, especially when there is no immediate feedback. With personal finance, you won’t see the effects of your efforts right away, but it’s still vital to take incremental steps every day, knowing that the end result will be worth it. 

Tribble shared three practical strategies for paying off debt as a new couple. 

  1. Make a budget. Know what money is going in and coming out. There are many tools for budgeting that can be helpful, including YNAB, Mint, and the Every Dollar app. Whether you choose a high-tech approach or just the “envelope system”, find a way you both agree on and create a monthly budget. 
  2. Live on one person’s salary. Budget to pay for all your expenses with one person’s paycheck, and free up the other paycheck for longer-term goals, like paying down debt or saving for college or a house. 
  3. Don’t let one person do all the work. Everyone needs to be involved because financial planning is a team effort. “Both partners should be engaged in the financial wellbeing of their family” to reduce resentment and ensure goal alignment, Tribble said. 
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Common Misconceptions About Tackling Debt

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Tribble also shared three common myths about tackling debt that he has often observed.  

Myth 1: One person can manage the money alone. “It’s not particularly healthy or fruitful to have one person doing it all,” Tribble said. Communication and alignment is key as you work toward your goals together. 

Myth 2: Investing or making long-term goals isn’t for you. Many people feel the stock market, investments, and long-term financial planning is only for wealthy people, but Tribble said that couldn’t be further from the truth. What is true, however, is that many services in the financial planning marketplace are exclusive and difficult to understand. That’s why Tribble focuses on serving people who were previously excluded from the conversation— young people, women, people of color—, teaching them how to invest and making it easy. 

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Myth 3: Budgets are all about restrictions. Tribble reframes budgets as a way to understand what you can do with your money, not what you can’t do. Budgeting frees people from the guilt of spending money, because they have already agreed how they want to spend every dollar. A budget allows the freedom to pursue the things you want, whether it’s going to school, changing jobs, or working for yourself.

When You’re Finally Debt Free: What’s Next?

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Congratulations. You had an honest conversation with your partner, made a budget, tightened the belt, and aggressively paid off your debt— now you’re debt free! What’s next? 

First, celebrate your victory. Becoming debt free is a huge milestone and step toward financial freedom. Having a “cheat day” with finances is not bad as long as it’s structured and part of a broader plan, said Tribble, so celebrate your win. 

Then, it’s time to invest. Tribble emphasized that any amount you can invest will be powerful as it grows and compounds over time. “Just getting started is vital with investing,” he said. Stockpile makes investing easy for beginners, and you can start with just $5.  

Make sure to reassess your goals as a couple along the way, as they’ll probably change over time. Reevaluate your savings, retirement, and personal investing goals as needed to make sure your financial goals are still aligned. 

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