When it comes to money, it’s unbelievable just how easy it is to make mistakes as a young adult. Trust me, I know. However, as easy as it is, the danger doubles when you have a partner. When romance comes along, the temptation to splurge is really high. You want an engagement bash, then a lavish wedding, and a big house where the both of you can live. You also want two cars, two or more kids, the finest schools, and I’m sure you’re already catching my drift on this one. Each of the money mistakes young couples make can set you back financially in different ways. Understanding what these common mistakes are can help you to avoid making the same mistakes we made and put you on a path to retire by the age of 37.
Things to Keep in Mind
The first thing you must always be thinking about is the fact that you want to retire before the age of 37. Therefore, here are some mistakes you need to avoid as a couple.
Do Not Splurge on an Extravagant Wedding
One of the most common money mistakes young couples make is to pay for an extravagant wedding. The average cost of a wedding in the United States is more than $26,000. This means that many couples spend $30,000 or more on this event. A wedding is certainly a monumental milestone in your life. Moreover, it is hopefully something that you will only do once.
However, there are numerous ways you can cut back and save money on this event. Simply scaling back your guest list and choosing a more affordable venue can save you thousands of dollars. There are numerous articles online filled with helpful, money-saving tips for pulling off a beautiful wedding on a dime.
Keep in mind that the actual wedding is just one day in your life. Also, your marriage will last for decades. In the grand scheme of things, the actual wedding is relatively unimportant. In fact, why not elope in an affordable location and host a small wedding reception for family and friends?
You could then invest the money you save. Therefore, you can really get started on your way to retiring by 37. Get your wedding to work for you instead of the other way ’round!
Never Keep Money Secrets From Your Spouse
When some couples get married, they co-mingle their funds in joint accounts. Others will continue to keep separate bank accounts. However, in all cases, you should be completely transparent about how much money you have. Moreover, be transparent about where the money is going. In fact, if you have separate accounts, you should sit down on a monthly basis to review your account status and discuss your financial goals.
The reality is that some people keep hidden assets or debts from their spouses. As a consequence, this is one of the common money mistakes young couples make that can create financial strain for the couple. The couple is not working together as a unit to improve their financial situation.
It doesn’t really matter that you have been using the hidden assets for a beneficial purpose, such as paying for a vacation. It will still breed distrust. Remember that your spouse will eventually find out about your hidden accounts, assets, credit issues or other factors. It may happen you apply for a mortgage or when other major life events occur. You can keep devastating distrust issues from affecting your relationship if you openly discuss all aspects of your finances on a regular basis.
Say No to Lifestyle Inflation
Lifestyle inflation is very easy to understand. It basically happens when you have earned more money than you would normally need for your daily, monthly or yearly expenses. At that point, instead of saving it in a bank to collect some interest on it or investing it, you decide to spend it. It can be on a huge house that you don;t need, luxury cars, lengthy vacations, items for the children to spoil them, designer clothing and so on.
However, while this is can feel very nice when you do it, remember that it is only a momentary pleasure. Moreover, it will not help your goal of retiring before the age of 37. As far as money mistakes young couples should avoid, this is a big one. You don’t need a mansion to live in or a luxury car to drive in your 20s. Work towards your goal and those will come just a bit later when you will have time to enjoy them.
Make Sure You Have Financial Protection
Because unexpected expenses can and do occur, it is imperative that you have insurance for every possible scenario. It is true that, when you’re young, you have your whole life ahead of you. Moreover, you cannot possibly imagine something bad happening to you. However, bad things do happen, trust me on this one. It can be anything, from damage to your house to an accident with your car to health problems, bigger or smaller.
Therefore, you must always be prepared for them. How? Simple. Have a savings account just these issues. That way, when the need strikes, you can dip into this account rather than into your daily ones. As a result, neither your lifestyle nor your savings will take a plunge.
Bonus read – 7 Things You Should Do If You Want to Retire Early
Save for Retirement
Perhaps the most significant thing you need to do is to save for retirement very early in life. This is one of the most devastating common money mistakes young couples make. Please, do not get lulled into a false sense of security. Moreover, do not think that you or your spouse, for that matter, have time to save for retirement. You do have time. However, every penny counts when it comes to this. Especially when it comes to retiring by the age of 37.
The equation here is simple. When you retire at the age of 37 instead of 60 or 70, you have a good 40 or 50 years left to live. Where will you get all that money without a job? You can imagine that sum needs to be quite big. Now do you understand that every penny counts?
Therefore, as far as money mistakes young couples make, you should really avoid this one. Start saving up as early as possible. Right from your first job, if you can.
There are sufficient people out there who already made many of the common money mistakes young couples make. They all had a different negative impact on their lives. The culmination of these effects, however, has been staggering. While they might be living comfortably now, they still have a few decades of work in front of them before they will be able to retire. However, if you plan to retire by the age of 37, avoid making these common money mistakes that young couples make.