Newlywed life marks the beginning a grand adventure with a steady learning curve.
There is no better way to begin that adventure than on a firm financial foundation. Here are four simple principles to help you start strong.
Live on one income.
Yep, I’m starting out with a fairly controversial statement. If at all possible, try to live on the income of one spouse. For me and Nick, this decision was fairly easy. We had planned from the beginning that when we someday had kids, I would plan to stay home with them. If possible, we did not want to get used to a much higher standard of living and then scale way back when children entered the picture. While living this way is challenging, it also allows you to save like crazy. Can you imagine having an “extra” yearly salary’s worth of savings in the bank?
Keep your housing costs as close to 25% or less of your take-home pay as possible.*
In the New York metro area this feels nearly impossible. It is not uncommon for people to spend 50% of their take home pay on rent. When Nick and I got married, I was working part-time in retail while hunting for a corporate job. After we got married, I moved into his gorgeous 1200 square foot, two bedroom, two bath apartment with double bay windows. It was spacious, perfect for hosting parties, and was decked out with granite countertops and stainless steel appliances. Oh, and I should mention it had a washer dryer in the unit, plenty of storage, AND a parking space in the garage. If you live in the city, you know that this place was practically perfect. Aside from it being a fourth-floor walkup – bringing in the groceries never got easier – the place was perfect for us.
Except that we couldn’t responsibly afford it with two people on basically one income. Our gorgeous, perfect-for-us apartment cost 40% of our take-home pay. A few months in after sitting under the weight of both wedding and school debt, we realized the wisest thing to do would be to move. It was an incredibly hard decision to make, but by moving we were able to save $850/month on rent, which moved us comfortably back down into the range of just below 25%.
Be willing to sacrifice.
This is a lesson you will learn over and over in marriage. With decisions both big and small, you will have to consider the bigger picture and compromise.
Nick and I moved to a slightly smaller apartment in a converted old Victorian house in Jersey City Heights just behind our Hoboken neighborhood. It seemed lovely, with lots of character. However on moving day, we realized our couches wouldn’t fit in what should have been the living room and had to significantly change our anticipated layout. I was extremely frustrated, but buying a new couch wasn’t an option because after all, we moved there to save money! We also had an incredibly small, narrow kitchen that didn’t allow for us to prep meals together without the risk of an accidental knife brush. As a result, we rarely cooked at home. Again, this is an accepted part of the New York lifestyle, but it really bothered me that we didn’t cook in more.
While there were many things that bothered me, I was able to remind myself that this place was our home for a season. We wouldn’t be here forever, but it was a necessary sacrifice in order to set ourselves up to succeed long-term. We saved like crazy, I got an office job six months after moving in, and by the time we had been there a year we found ourselves debt free!
Consider your lifestyle.
What is most important to you about your life together? Do you love to host big parties, intimate gatherings, or prefer to just use your place as a crash pad? Do you love to cook? Do you have pets? What makes a place feel like home to you?
After two years of living in the Heights, I found myself really missing hosting parties, community prayer nights, and having friends over for dinner. Since we are both involved in our local church (and Nick now works there) our hope was always to be able to move back into Hoboken to be as close as possible to friends and the community which we hope to impact.
In our second year of being financially free, I kept an eye on Craigslist in case an apartment popped up that met our criteria (the main component of which was nice kitchen) AND our budget. Nick and I have both changed job situations since then and our housing is about 31% of our combined take-home pay. While it is a slight stretch for us and still requires some sacrifices, we are back in a space that is back in our desired neighborhood and overall more in line with the kind of life we want to live.
What housing challenges have you experienced as a newlywed? What steps have you taken to be financially responsible in your early years of marriage?
*This number is the percentage that financial guru Dave Ramsey suggests. While we haven’t formally been through the Financial Peace University class, we have found principles from his book Total Money Makeover a helpful guide to making wise decisions.