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Money and marriage: 3 key tips

Getting married may influence the way you plan for your future and it can change your priorities. Working as a team to set and achieve financial goals can help produce positive outcomes on your finances.

Build a financial plan together

Financial planning can be broken into 5 steps: 
 
1. Discovery. Use this time to identify your goals. It’s also a good idea to honestly evaluate your saving and spending styles, and feelings about investment risk. Are you trading stocks while your spouse researches money market funds for a month before committing? It’s worth finding out. 
 
2. Checkup. Review where you both stand relative to debt and cash flow. Evaluate how much money is coming in and going out every month and how much you have left over for saving and fun.
 
3. Create an action plan. With your goals and cash flow in mind, you can decide on the timeline and plan for achieving your goals. You may have multiple goals spanning various time frames. For instance, you may plan to have a child, buy a house, save for an education, and save for retirement. Some of the goals may take a higher priority than others at various points in your life but keeping them all in mind can help you thoughtfully navigate any potential tradeoffs.
 
4. Implement your plan. Choosing accounts and investments for your various goals is the next step. There may be accounts that offer tax benefits for saving for your specific goal. For instance, a workplace savings plan or IRA can be used to save for retirement or a 529 plan account could be used to save for college. If you participate in an employee stock purchase plan at work, it’s important to consider that as part of your overall financial plan. 
 
Choosing investments would start with some basics including how long you plan to invest (known as your time horizon), your financial situation, and your tolerance for risk. 
 
5. Monitor. The final step is monitoring your progress and adjusting as needed if markets or life gets off course.

Set short- and long-term financial goals

Goals don’t have to be financial but many of life’s big goals tend to have a financial element. For example, taking a trip together can be the first big test of a relationship, but getting there may take planning and saving.

Bigger goals couples plan for can include buying a house, having a wedding, or starting a family. More long-term goals can include saving for a child’s education, retirement saving, or investing.

Acting as a team and getting things accomplished can strengthen your relationship. It can also emphasize your shared values and goals. There’s an opportunity cost associated with pursuing one goal over another—so setting goals with your partner is a way of affirming your commitment.

Pay off debt as a couple

Acting as a team to spend less than you earn, and prioritizing debt repayment can help you establish your financial footing. Before putting everything into your debt paydown plan, consider reviewing your savings.

A flexible spending account or a health savings account (if you have a high-deductible health plan) let’s you pay for medical bills using pre-tax money.1

If you have a workplace savings plan and your employer offers a match, try to save enough to get the full match—it’s like “free money.”2

To make sure you can keep prioritizing debt payments over time, set aside some cash to cover emergencies. Consider tackling debts in a methodical order—whether that’s focusing on higher balances or higher interest rates.

High-interest credit card balances

If you have multiple credit card balances, you could combine them into one loan or transfer the balance to one card if you can get a good interest rate.

Alternatively, you could use the snowball or avalanche method to put extra payments toward one balance at a time (while paying the minimum or more on other cards). With the snowball method you would start putting extra payments toward the lowest balance card to pay it off quicker. Once it’s paid off, you can redirect the payments that were going to that card to the next lowest balance, along with any extra payments you can afford.

With the avalanche method, you would start aggressively paying off the card with the highest interest rate. After you pay it off, you can put those payments toward the loan with the next highest interest rate. This method can save you money over time by focusing on the most expensive loans first.

Paying off high-interest student debt

In general, it is a good idea to pay down student debt above 8% interest as a rough guideline. You may be able to deduct the interest on a student loan—but only up to $2,500 a year.

Government student loans, car loans, and mortgages

Pay the monthly minimum on federal student loans, car loans, and mortgages while paying off higher interest debt. These loans generally have lower interest rates, and because some offer tax benefits, it makes sense to only make the minimum monthly payments on them.

Get organized, hit your goals

Create a flexible plan you can adjust to your life.

More to explore

1. Contribute to your HSA as long as any Savers Credit or earned income tax credit (EITC) would not be reduced. 2. Assuming you will be vested in employer contributions by the time you leave your employer.

This information is general in nature and provided for educational purposes only.

Fidelity does not provide legal or tax advice. The information herein is general in nature and should not be considered legal or tax advice. Consult an attorney or tax professional regarding your specific situation.

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