What would you like as a wedding gift? A juicer or cash? Your wedding day was lovely and hopefully you managed to get away for a short honeymoon. You have returned home to loads of presents and some envelopes stuffed with gifts of money from parents, family and friends to help you start out in life together! It is tempting to want to go on a shopping spree, but instead, carefully consider what to do with the cash.
How much money did you receive?
Make a note of all those that gave you gifts so that you can acknowledge the gifts with personalized thank you cards as soon after the wedding as feasible. If you received cash, make a note of how much each guest gave you. Once you have counted all the money and totaled it up, it is time to have a discussion about what you should do with it. This is a good opportunity to have that long overdue first money conversation particularly if you didn’t discuss money matters whilst you were courting.
Deal with any debt
There may be some wedding expenses to pay off and other looming bills. Have either of you entered the marriage in debt? If so, this is a good time to pay it off or at least significantly reduce the most expensive debt particularly credit card debt or make sure interest payments are up to date. It really is not ideal to start out in marriage with debt. Your spouse’s debt has just become your problem so you can’t wish it away!
Do you have an emergency fund?
When you have money to spend, the last thing that you want to think about is that things can go wrong; but they do. The generator may pack up, you may need to replace two car tyres; you need to have some cash in safe, short-term savings to cover unexpected emergencies. You don’t want to have to use your credit card or to borrow from family and friends to sort out such situations. Try to build 6 – 12 months of your monthly income in an easily accessible account that can serve as your emergency fund.
Save and invest for the future
Once you have made a significant dent in your debt to make it more manageable, start thinking about what you can do with the balance of the money. Whilst you are thinking about it, it is useful to place such windfall income in a 30 – 90 day money market account so that you can earn interest whilst you determine what is best. This will earn you more interest than you would get in your savings or current account.
You might consider opening a joint account with these funds and begin to build family savings this way. Some couples pay a portion of their income into such an account whilst they also maintain separate accounts. The joint account is useful to pay for household expenses or saving towards your family goals.
Investing for the future
It might seem absurd to think about retirement since you just got married. It’s never too early to start thinking about retirement. If you are both in full employment you should already have Retirement Savings Accounts (RSA). If you are self-employed, open one for yourself and start to contribute towards this.
If your debt is under control and you have some savings, you can decide to put some of your wedding money into the stock market. This comes with volatility and risk but over the long term has outperformed other investment classes. Bear in mind that this money should be what you can afford to put away for several years. Thereafter you can decide to automate your savings by transferring a certain amount to grow this investment over time.
Visit a reputable asset management company to discuss your needs. They will review your financial situation and your risk tolerance to help you determine what is best for you given your particular circumstances. Mutual funds offer diversification and professional management and thus reduce your risk.
Now that you are married don’t forget to change the beneficiary designations on your bank accounts. Chances are that if it is your first marriage, your next of kin designation still has your parents as beneficiaries should anything happen to you. It might seem absurd to even consider something so morbid but there are too many cases of the great distress caused just because paper work was not properly attended to.
Save for a down payment on your home.
If you are renting your first home, you might set aside part of the money towards a down payment for owning your own home. Depending on the location, real estate is an asset class that is likely to give you long-term capital appreciation. Even though as a young couple you are likely to have to rent a home for a time, make owning your own home a priority. This is a great use of wedding funds as you put the money aside towards a specific purpose.
If you are one of the lucky young people that is already on the property ladder, consider using your cash to pay for some maintenance or renovation if necessary. Improvements in your property can increase the value of the property but be careful not to spend excessively and make your house more expensive than similar properties in the neighbourhood.
Set aside Money for your children’s education
Educating your children will be one of the most significant expenses in your life so you might as well start to build an educational fund early. But even before that there are the expenses of having children including child-care, nursery and other essentials, which are also expensive and need to be planned for.
Invest in your education
One or both of you may wish to further your education in a few years with a master’s degree or other professional qualification. These can be very expensive you are your greatest asset so you must continue to invest in yourself; regard this as a sound investment in yourself.
Spoil yourselves a little
Depending on how much you still have after paying off or reducing your debt and paying off some bills, you can decide to spend part of the money on something that you both like or some fun activity.
Financial concerns are one of the greatest causes of friction and broken relationships. Take advantage of this opportunity to solve a few of nagging money troubles and invest for the future. When you are young, you have the advantage of time. This means your investments will have the time to ride the volatility that goes hand in hand with stock market investing. This is a great opportunity to together lay the foundation for long-term financial security.
Nimi Akinkugbe
