Saving money can be difficult when you’re starting out as a young couple. In addition to wedding costs many young couples may still be paying off student loans and are probably starting to think about purchasing a home.
To help young couples get off on the right foot, we’ve put together some suggestions for starting and maintaining a nest egg.
1. Establish a budget
As newlyweds with two combined incomes, it’s important that you establish a workable budget that shows your income and necessary expenses. This will help you determine what’s available for savings and flexible spending. Determine who will be the primary person to track your income and expenses unless a decision is made to share the responsibility.
2. Begin saving on a consistent basis
Set aside a portion of your income every month to put in a savings account. At MidWestOne Bank, we recommend you have several months of living expenses in savings for those unforeseen circumstances such as job loss, illnesses, or other instances that can wipe out your income.
3. Participate in your employer’s retirement plan
By participating in an employer’s 401(k) retirement plan, where employers often match your contribution, you are essentially receiving “free money.” The long-term impact of contributing to a 401(k) plan or a retirement account such as an IRA when you’re in your 20s or 30s is dramatic, as compound interest accumulates over the decades until your retire.
4. Eliminate debt
If you and your partner have credit card debt, begin by paying off the highest interest rate first, while making the minimum payments on other cards. For student loans, consider investigating consolidation options that could lower your payments and allow for one convenient payment. To eliminate your short-term debt, identify ways to pay it down faster by cutting other expenses or taking a part-time job.
5. Be cautious with using credit cards
Use restraint before making a credit card purchase. Young couples often get into debt by starting a pattern of buying whatever they want because they think they “deserve it.” Many times this leads to interest-only payments and ends up harming their credit score. A good rule of thumb is to never put anything on a credit card that you cannot pay back before finance charges incur.
6. Consider less costly alternatives
There are many ways to reduce expenses and increase savings. Some ideas include purchasing brand-name clothing at resale shops, give homemade gifts and cards, using Netflix instead of going to the movies, using the library and the Internet for reading resources such as magazines, newspapers, video rentals and enjoying free entertainment.
7. Reduce food expenses
Shop for groceries with a prepared list and budget, and try to avoid going when you are hungry. Also, using coupons as much as possible for necessary items will greatly reduce your grocery bill. Eating out is expensive and can wreck havoc on your budget. Instead, bring your lunch to work, avoid going to restaurants on a frequent basis and consider entertaining at home. Reserve restaurants for special occasions and use services like Groupon for special deals.
8. Be creative and make it a joint goal to find ways to cut expenses
Make it fun and challenging to find ways to cut your expenses. Train yourself to recognize saving opportunities when you see them.
By following these simple tips, you and your partner will set yourself up for a lifetime of saving.