This article was originally published on MSN.com
Your financial journey together begins with discussing money goals
The first thing you and your partner will want to do when beginning your financial journey together is to talk about both your short-term and long-term financial goals. Do you plan to make a large purchase in the next few years such as a car or a house? Longer-term goals might be focused on retirement or whether you see yourself having kids and, if so, how many?
Discussing these goals might be difficult, but it’s important to make sure you and your partner are aligned in how you think about your financial lives. Small differences such as slightly different spending habits can be managed, but you’ll want to be on the same page when it comes to the big decisions.
You might even find that talking about your finances helps your relationship. In its 2020 Love and Money Survey, TD Bank found that 18 percent of couples admitted they don’t talk about money enough, and 13 percent said they wished they’d talked about it sooner.
Determine an investing strategy with your partner
Once you’ve identified your financial goals, you’ll be in a better position to start investing in order to reach those goals. But here again, you and your partner will need to discuss your views on investing to make sure you’re aligned, particularly when it comes to weighing risk vs. reward.
Some people have very high risk tolerances and are willing to pursue aggressive investments in the stock market or even using options contracts. Others are riskier and any possibility of losing money makes them scared. Discuss your risk tolerance with your partner and work to pair your investments with your financial goals. A more aggressive approach might make sense for goals that are a long way off such as retirement or planning for your child’s education, but those wouldn’t be suitable for more immediate goals like a down payment on a house.
If both you and your partner work full-time, make sure you’re taking advantage of employer-sponsored retirement plans and contributing at least enough to receive any match offered through the plan.
Decisions around kids tend to have a major impact on a couple’s financial life. Whether to have them, how many to have, and how to plan for their education are questions many couples face. According to a 2020 report from the U.S. Department of Agriculture, parents can expect to spend $233,610 raising a child through the age of 17. The amount is even higher if expected inflation is factored in and it also doesn’t include the cost of college. Raising kids brings great joy to many parents, but you’ll also want to understand how children will impact your finances.
Consider setting up a brokerage account: Joint vs. separate accounts
Once you’ve discussed your goals and investing strategies with your partner, you’ll need to set up a brokerage account to invest outside of your workplace retirement plan. Couples should carefully consider whether to set up a joint account or two separate accounts. Make sure you understand your partner’s complete financial situation before agreeing to a joint account.
Communicate, communicate, communicate. Understanding your partner’s financial situation and developing financial goals together can only happen if you’re comfortable discussing finances with complete honesty. But sharing those differences can help you put together an overall financial plan that will get you both where you want to be – in the short and long term.
For more information on how UHFCU can help you get started on your investment journey, visit uhfcu.com/investment-services/.
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