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8 Financial Tips for Newlyweds

  • Cara Davis Author
  • Updated Apr 03, 2009
8 Financial Tips for Newlyweds

The American Way

The size of the average house has increased nearly 40 percent, from about 1,500 square feet to 2,300, since 1970, according to Gopal Ahluwalia, director of research for the National Association of Home Builders. And that’s despite an overall decline in the size of families today. We’ve got bigger homes and kitchens and more bedrooms and closet space than ever. Along with that extra space come higher taxes, more expensive utilities, and a bigger mortgage, not to mention the cost of upkeep for all the stuff we put into the house.

Some say many of our lifestyle woes are caused when we take our cues from celebrity society—the rich and the beautiful. We want to be them, so we spend money we don’t have on material things and services to make us feel closer to a privileged lifestyle.
But in one case, we would be well served to emulate one celebrity and her newlywed husband. When comedian Kathy Griffin and fiancé Matt planned their wedding, they went countercultural and turned a day all about them into an opportunity to give back.

They made calls to wedding vendors to have everything—I mean everything—donated to the wedding (from the location to the decorations), with the understanding that the bride and groom would in turn give a sizable contribution to two charities of their choice. And in lieu of gifts, the couple requested that the guests give donations to these charities instead. For the couple who has everything, it’s a viable and satisfying option. “I’m not bashing people that have a gigantic, expensive wedding, but my feeling is that’s just a lot of money for a one-day party that could be used for something more important,” Griffin said on “Weddings of a Lifetime Presents: Brides of All Ages.”

Give It Away

The fastest way to change your perspective about money is to give it away. To those living from paycheck to paycheck, saving money is at best optimistic; giving is nothing less than unrealistic. But giving could just be the best thing that ever happened to your checkbook.

Christian tradition (and others as well) includes a tenet of giving 10 percent of our income to a local assembly. This tithe does not only keep the lights on at the local church or enable it to invest in local charities, it does a number on the giving person’s heart. This act acknowledges that all we have and everything we are comes from God.

Giving changes our perspective on money by helping us see a bigger picture. We set priorities and make sacrifices in order to give to a cause we believe in. Giving opens our eyes to needs that are everywhere. It increases our capacity for compassion. “It connects us to the world and that lets us see past ourselves,” Mary Hunt writes in Debt-Proof Your Marriage. “Giving develops our faith and pulls the plug on our greed and compulsive money behaviors. Giving calms down that thing that lives inside some of us that says ‘I want more and more and more!’”

Hunt suggests developing a habit of giving by treating it like a regular bill, with the same urgency. If you and your spouse feel that 10 percent is too much to start with, try 2 or 3. Talk about your feelings about giving and watch your love for your spouse grow as both of your hearts are enlarged through the act of giving.

Eight Tips for Engaged and Newlyweds

Before getting married, couples should itemize their assets on paper and share information like credit card balances and loans they’re still paying off. There should be no surprises once you walk to that altar. Then, consider these principles to start your new life together on the right foot:

Check Your Credit Report: Apply for a credit history. There are three main agencies that can give you reports. Visit for more information. Look for errors that might prevent you from getting a home loan later.

Put Aside an Emergency Fund: Place $800-$1,000 aside for emergency purposes. This will prevent you from going further into debt while you’re trying to pay off any existing debt.

Pay Down Debt: Starting with your smallest debt, put all the money you can manage to pay it off first, while keeping your minimum payments on all other debts. When that is paid off, put that money toward your next highest, according to a strategy proposed by Dave Ramsey, financial talk show host and author. While you’re paying off debt, don’t even think about buying something you can’t pay with cash. Your new apartment, condo, or home can wait for a new bedroom suite or big-screen TV.

Compare and Merge Budgets: It’s important for both parties to know exactly what money is going where, so don’t just hand the checkbook off to the spouse with better accounting skills. If one person takes charge of getting the bills paid, make sure you’re aware of how much is going where. This will avoid miscommunication about money that could be potentially damaging to your marriage.

Wait Before You Buy: Don’t consider buying a home until you’ve paid off any credit card debt and have repaired your credit rating if necessary. When you do look to buy, make sure the total amount for the house payment, including taxes and insurance, won’t exceed 25 percent of your take-home pay. If your job situation is not secure, only aim for 15 percent. (Mortgage lenders typically allow payments to equal up to 35 percent of take-home pay.)

Start Eyeing Retirement Now: Contribute the maximum to the 401(k) plan offered at work or invest in a Roth IRA, if eligible, which usually offers the benefit of tax-deferred earnings. There’s a neat little trick called the power of compound interest that works really well when you save early. Here’s how it works. If you invest $3,000 in an IRA every year from age twenty-two to age thirty-two and then stop saving entirely, your IRA could grow to more than $550,000 by the time you’re sixty-five, assuming 8 percent average annual returns, according to “How to Blitz Your College Debt,” by Liz Weston on MSN Money.

But if you put off saving for those first ten years, you will never really catch up. Make $3,000 contributions annually every year between age thirty-two and age sixty-five, and your IRA would grow to just $437,000. In other words, you would have more by contributing for just ten early years than you could make by contributing during thirty-three later years.

Pay Off Your School Loans: Eventually you’ll want to get rid of those pesky school loans, although they’re not a cancer like credit card debt, because interest rates are at most 4 percent and the interest charged is tax-deductible. But, add $100 a month to the $203 minimum on a $20,000 loan, and you can be debt-free in six years, rather than ten, according to MSN Money.

Learn About Investing: Use your young years to learn about investing and what type will best fit your financial personality. Consult with a financial planner to learn about your options. Put aside two to four hours each week to read books on the topic and The Wall Street Journal. Talk to friends who invest in real estate. Then start experimenting with smaller amounts of dough. At some point, you’ll need to jump and take a risk, but make sure you’ve got a solid financial foundation first. 

Click here to read Part I of this series: Set the Right Financial Foundation for Your Marriage

Adapted from Cheap Ways to Tie the Knot by Cara Davis. Used by permission of  [RelevantBooks], copyright 2006 Cara Davis. All rights to this material are reserved.

Cara Davis, 27, is the editor of Radiant magazine and editorial director of Relevant Media Group. She planned her dream wedding in seven months for less than $5,000 in November 2003. Visit her website at