One of the biggest downfalls newlyweds and budding families face is understanding what they need to spend and what can be saved. There's no need to rush out and buy a new car, secure a home mortgage or purchase brand new furniture when a change comes along. Still, more often than not, these are the biggest mistakes young households are prone to making. Keeping a cool head and having a financial plan can help keep money where it should be – in your bank account.
Rent or buy
Instead of rushing out and seeking a new place, a new couple should sit down and consult about finances to see what they can jointly afford. If both parties are already cohabitating, there's no need to change domicile simply because marital status has changed. Knowing how much each can contribute and figuring out what can be achieved together is essential to not over-stretching on housing. In the case that neither partner has a residence conducive to a couple, then it might be wise to move, but don't feel compelled to get a home loan immediately. The National Foundation for Credit Counseling (NFCC) found that one of the investment regrets of American families was purchasing a home they couldn't afford.
Saving and spending
Perhaps the biggest regret of all for NFCC respondents was spending more than they could afford. More than half of Americans fell into this category, with another almost 20 percent saying they should have saved more. With personal wealth at a 20-year low and payroll cuts and unemployment still occluding the income landscape, it's important to know where money should go.
The Washington Post's Michelle Singletary wrote that righting the wrongs of extreme spending and a lack of savings was key to resolving financial problems. That means putting aside a specific amount of money every month in a dedicated bank account, even if opening an account just for that purpose is what it takes to maintain an emergency fund.
Make necessary changes
Combining assets can mean more than just adding credit scores and subtracting certain luxuries. Go Erie pointed out that checking health plans and tax status are essential before moving ahead with any other financial plans, as these can result in unforeseen expenses that could catch a new family off-guard.