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Investing Tips for Married Couples
Talk About It
Many times, partners do not see eye to eye, have different preferences or moods. Money is the No.1 issue that couples argue about, according to studies.
It is crucial to discuss financial goals and retirement plans with one's spouse, figuring out a strategy in advance, to avoid any confrontation later.
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Key Ideas
Investing In Each Other
A strong, healthy, and long-lasting marriage has some key ingredients that make it work: Commitment, Hard Work, Consistency, and Intentionality.
The same ingredients are required for building wealth when one is with a life partner, planning to spend your entire life together.
Life partners have to invest in each other.
Talk About It
Many times, partners do not see eye to eye, have different preferences or moods. Money is the No.1 issue that couples argue about, according to studies.
It is crucial to discuss financial goals and retirement plans with one's spouse, figuring out a strategy in advance, to avoid any confrontation later.
Saving up For Retirement, Together
- Firstly, save up for the emergency fund, which is three to six months of expenses, and set it aside. After that, least 15% of your combined gross household income should go towards your retirement, once all debt is cleared.
- If only one of the partner works, you still can save up for retirement using a Spousal IRA, provided a joint tax return is filed. For details, you can consult an investing professional.
- It is also a good idea to clear up the old 401(k) accounts which are hanging around from the old jobs and put one's investments in order.
Tips For Better Financial Planning
- Check and update the beneficiaries of your financial accounts.
- Life Insurance is an important investment and security net for you and your family.
- Consult an investment professional if you need help in going over all your investment, insurance and retirement plans.
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Create an income safety net
Many singles don't have a strong enough backup plan to cover the costs of a major illness or other problems.
Ensure you have enough cash on hand to cover emergencies. For singles, the aim is between nine and twelve months of living expenses in a savings account. As you near retirement, consider bulking up to at least two years of living expenses.
Long-term disability policies
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To ensure you have enough coverage, aim to bring your total coverage up to 80% o 90% of your take-home pay, including bonuses and commissions.
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The avalanche debt method
In the debt avalanche method, you pay your debts from the highest interest rate to the lowest interest rate, regardless of balance.
You will pay less in interest if you pay off your debts in this order. You will also pay it off faster.
Deciding between the Snowball and Avalanche debt methods
The supporters of the two methods are both enthusiastic about which one to use. However, it barely matters which system you use. The best approach is the one that keeps you motivated.
Make the minimum payments on all of your debt. Then, focus on one debt that bothers you the most and put every dollar you can towards it until it is gone. Then move on to the next debt.