Tom Cruise bought Katie Holmes a small $13 million pound jet as a wedding gift, For their dazzling wedding, Angelina Jolie bought Brad a typewriter belonging to Ernest Hemmingway that cost a cool $25 000. And James Righton bought Keria Keightly a 100 year old olive tree.
Yes, newlyweds can notoriously splash out on big gifts and extravagant presents. And to the rest of us mere mortals who don't live in the lavish world of celebrity, this can perhaps mean buying a new car or clothes or going out to nice restaurants.
In the first blush of the exciting new journey it's easy to forget about the mundane graft of finances. Yet it’s important to get this right as soon as possible as you'll be charting your financial course for many years ahead. By planning a stable financial investment journey early on you'll be ahead of the game. As much as we'd love to think we have unlimited time, the reality is everyone has a finite working life. It’s never too early to start planning for retirement and setting yourself up for a comfortable life.
Here are five important things to consider for your financial future:
1. Work together to reduce credit debt and pool resources
One of the vows taken at a wedding ceremony is to share everything for better or for worse. Well, sadly, this includes debt. No one wants to hear "with these mounting visa card debts I do thee wed" - but it's the reality of getting married. One common trap newlyweds fall into is continue keeping their credit cards and debt quite separate. This is a mistake that will hold back both in the partnership. If one partner is paying off a credit card debt of $3000 on a 9% interest rate and the other is paying off a credit card debt of $1500 on a 4% interest rate, the partner with the lower interest rate and debt will become dragged down by the other one's debt. Quite simply, if you're a newlywed couple you are part of a working partnership and you need to consolidate everything. So it's best to be upfront and sit down with your partner and map out all the current debts you each have and list all expenses. Then work out what all your total incoming revenue is. It's imperative to eliminate all household debt before starting out on any financial investment journey.
2. Have a household budget and spending plan
In your old single life you could make random spending decisions whenever you liked. It's very tempting to want to continue that way. However, as a couple you need to be upfront with each other about all spending decisions and purchase. Especially if you're both working and generating separate incomes. The true financial power you have as a couple is in pooling all resources. So make sure each person is aware of all current and future spending decisions. This can include simple things like monthly transport costs or insurance or monthly gym subscriptions or luxury items like movies or electronics. By thinking ahead to what you're likely to spend money on and keeping your partner in the loop, there won't be any sudden, nasty surprises and you'll be able to craft a financial plan so much better.
3. Work out your financial, long term goals
Where do you both want to be in 20 to 30 years time? Do you each imagine still working right up to retirement age? Are there other things you'd like to do like take a year off to travel? Do you want to own your own home? If so, where? If you're planning to have a family then this is another financial factor to consider. It will also force your thinking about how much money you'll need to reach that goal. Once you've reached an agreement about where you'd like to be, the next step is how to do it.
Sitting down with the other person and discussing your financial future is a useful exercise to do, just to see if you're both on the same page.
4. Look into investment options as a secondary revenue stream
It's quite likely that even if you combine your income with your partners you still won't be able to reach your long term goals. Having a secondary source of income also acts as insurance in the event of someone losing their job or becoming incapacitated. As we've seen from the years of the GFC and the minerals crash, stock market speculation is not always the safest. Yet there are many other options out there. Property investment remains one of the most attractive and popular choices in Australia for a good reason: quite simply people will always need somewhere to live. And Australia will always be a highly desirable place to live in, due to its climate and landscape; its stable economy and small population. The property market in this country has certainly fluctuated on occasion yet has clearly demonstrated a steady overall, upwards trajectory over the last 30 years. Property investment doesn’t take as much capital as you would think. Building a property portfolio is not daunting and is something achievable for nearly every income earner provided its done carefully and using solid research.
5. Seek out independent consultation from a property expert
There's a reason why not everyone wins at property market investment. It's an area that everyone thinks they can be an armchair expert or else can suffer from the adage "a little knowledge is a dangerous thing". Far too often, investors all demonstrate lemming like behaviour and follow the same property investment trends. We've seen this lead to people being caught out with oversupply and then subsequent rental returns falling. Ideally, for a newlywed couple playing the long game, you want to invest in a long term medium growth area. This requires deep insights and solid research to ensure you're not going to get caught out. By choosing a free consultation with a DPN representative you're getting a carefully tailored plan for you and your spouses needs and gaining valuable information that will set you off on the road to your valuable financial goals.
