Each of us can find joy in life—but how sweet it is when we can experience life’s journey with someone we love. If you have recently married, it’s important for you to start planning your financial future together and creating a “team approach” regarding your financial goals and responsibilities.
What is your net worth?
You need to see the big picture in order to know where your focus should be going forward. What are your assets? Do you have student or credit card debt or loans? Do you have any funds set aside for emergencies or unemployment? By determining your net worth, you will understand where you are now and can begin setting goals for where you want to be in one, five, or ten years from now.
Look at your cashflow
How much income is coming in each month? How much is going out (as expenses) each month? Do you know where the money is being spent? Monitoring your spending is easier than ever before because you can download data from your bank and credit cards into financial programs that will help you sort and catgegorize your finances. Stick to a budget which will allow you to pay off your debt as quickly as possible and keep you on the right track!
It’s amazing how a little “bundle of joy” can turn your whole world upside down. This is often a big financial transition as well. Sometimes first-time parents go from a two-income household down to one. Others opt to keep two incomes going, but now must play for childcare. The key is to adjust your expenses as needed so that you continue to spend less that you earn.
As parents, you must also make sure you have adequate life insurance (7-10 years worth of earnings), medical insurance, and disability protection. You should also have a will and necessary legal papers to assist your family should you die or become disabled.
One of the most rewarding financial exercises you can do as a couple is to sit down together and talk about your future dreams. At JFA, we recommend that families take several sheets of paper and create a “time-chart” with columns for each of the next ten or twenty years. List the age of each family member under each particular year. List milestone events and targeted goals under each year. This may include: 1) complete graduate degree; 2) get a bigger house; 3) “Junior” starts grade-school; 4) replace car; 5) visit family in Florida, etc.
It’s amazing how a simple piece of paper can give you a “vision of the future” for your family. This exercise helps you visualize where you want to be and what you will need to do to get there. It will also help you understand that time passes quickly, and that a little planning and preparing now will pay big dividends in the future.
Financial planning is an evolving plan that changes as you grow in your career path and move on in your life stages, it is a plan that needs to be reviewed as the circumstances changes for example getting married, buying a house and raising a family.
As your life goals and financial status changes you will need to review your financial plans to see if you will achieve your financial goals within the given time line. Give Johnson Financial Advisors a call and we would love to help you 602-242-4000.