Setting Financial Goals As A Newly Married Couple
The merging of bank accounts & investment accounts is a pretty black and white process. You move IRA account from one custodian to another. You combine bank accounts together. It is pretty much this or that. However, financial goals are not black and white, cookie cutter. A financial goal that one couple may have may not be the same financial goal that another couple has. Shoot, even a financial goal spouse 1 has may not align with a financial goal spouse 2 has. So how do you create financial goals together (and/or separate) as a newly married couple?
Step 1) List out each of your financial goals
I always find this a good place to start. Each spouse write down 5-7 financial goals you have. These can be individual goals and/or joint goals that maybe you have talked to the other spouse with. Don’t cheat & look at what the other person is writing down. Some examples of financial goals could be:
Max out my Roth IRA this year
Take 1 vacation each year
Pay $300 a month towards my student loans
Keep my emergency fund at 4 months worth of expenses
Take my spouse to dinner every week/month
Put an extra $50 a paycheck towards my car loan
Keep the grocery bill under $120/week per person
Save $5,000 this year in a taxable brokerage account
The purpose of this exercise is to see where each spouse stands on their financial goals. This isn’t a gotcha game or a way to pit you against one another. Once you each have your own financial goal list written down, now it is time to move to the next step.
Step 2) Come up with your combined financial goals
Now that you each have a list of financial goals, it is time to share them with each other. Take the time to walk through each goal & explain to your spouse why it is on your list. Once you both have shared your goals, it is time to come up with a combined list of financial goals.
One way to start this list is to think big picture. Where do you picture your lives together in 5 years, 10 years, 20 years & in retirement (I know retirement may be far away for you, but it is still good to think about). Maybe you are planning to have children, there are financial goals around this to think about. Maybe you want to buy a home in 5 years, what can you do now to start working towards that goal.
Now it is time to come up with a list of 5-7 shared goals for your relationship. You can have more than 5-7, however if you have too many goals at once, then it is hard to achieve them, as your actions will be all over the place. Here is an example of 5-7 combined goals for a couple named Tom and Sarah:
Put an extra $200/mo towards Tom’s student loans
Put an extra $300/mo towards Sarah’s car loan (if we stick to this, will be paid off in 11 months!!)
Get the match in both Tom’s and Sarah’s 401(k)
Save $400/mo towards house savings to buy a house in 4-5 years
Do not spend more than our monthly expense budgets
Pay off Tom’s $2,5000 credit card balance in 4 months
Take 1 vacation each year without having to put it on a credit card balance
There are tons and tons of goals you can have here, so the list is endless. It is important to have shared goals that
Range in time horizon (short term, middle term, long term)
Align with non-financial goals
Specific
Saying “we want to save” is not as good as “we want to save 4% of each paycheck into our 401(k) + an extra $400/mo into our taxable brokerage accounts”
Achievable
Saying “we want to be millionaires tomorrow” is not realistic. I am all for dreaming big, but not being unrealistic
Step 3) Prioritize those financial goals
A quick step here is to prioritize those financial goals that you came up with. Maybe you have 6 on the list. Prioritizing them in order of importance & achievability is a good idea. For example, maybe two of your goals are to save for a house & pay off credit card debt. It may make sense to prioritize paying off the credit card debt first before saving for the house.
When you come up with your list, it is not necessary to do all of them at once, rather they are just goals you have. So prioritizing them will help you achieve those goals one by one.
Step 4) Create a plan to achieve those goals
Any goal is hard to achieve without a plan. So now it is time to create a plan to achieve those goals. For example, if your goal is to save $10,000 in 2025, it is a good idea to plan out how you will accomplish this. $10,000 is a daunting number if you don’t have a plan to get there.
Let’s say you get paid 24 times a year, one way to create a plan is to see how much you would need to set aside each paycheck to get $10,000 saved.
$10,000/24 = $416.67
A plan to get $10,000 saved in a year is to save $416.67 per paycheck.
By creating a plan for your goals, it helps you see the small steps it takes to get there, rather than just some big numbers that seem unattainable.
Step 5) Update the goals as life happens
Life happens. Maybe you set a goal to buy a house in 5 years but you have a job loss. Maybe you get a promotion and make more money, so you can buy a house in 3 years. Maybe you had a goal to pay off your credit card in 7 months, but you had an emergency on your car (& you didn’t have an emergency fund fully funded yet) so you had to take on more credit card debt to pay it. Life happens. That is okay. The important part is if life happens & your goals change, it can be a good idea to go through this exercise again to reset your goals, reprioritize them & create a plan to accomplish those goals.
I’d recommend sitting down at least once a year to go over your goals, check the progress on them and/or create new goals as your life changes.
Goal setting is an important aspect for couples. This helps you have shared goals to work towards, increases your accountability to achieve the goals you wrote down & lower your financial stress since you a plan with your finances.
Hint: This is why it can be valuable to speak to a financial planner who can help you organize your goals, prioritize your goals & help monitor your goals. They also can help you understand the pros and cons of goals & how all of this plays a factor in your entire financial situation.
Thanks for reading & I hope you found value in this post.
-Kolin
If you are looking to get organized on your finances, read this post: Getting Your Finances Organized As A Newly Married Couple
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