’Tis the wedding season, and I remember my big day ― now nearly 25 years ago ― as well as the financial challenges and lessons that followed.
While my job for Wells Fargo involves helping people save for retirement, I can tell you that my early married years were tough financially. We married fairly young (by today’s standards) and started our family early. My husband, Tony, delayed college while serving in the Army, so I worked while he earned his undergraduate degree. Then I went to night school for my master’s degree when he was done.
One child became two, and finally three.
Like many young families, we had a lot of financial goals to work toward. Money was tight. There were many weeks when we really weren’t sure how we were going to make it to the next paycheck. But we found our footing, figured out a plan that worked for us, and made it through.
Looking back, there were principles that helped us get our financial footing and build a solid foundation. What follows are five money-saving tips that have served us well. I hope they’ll do the same for other couples who are beginning their lives together.
- Limit the number of credit cards. We came into our marriage with a bunch of smaller balances on different credit cards. It masked the true amount of debt that we had and also stressed me out to see all of the bills roll in each month. Our first joint task as a married couple was to pay off the cards one by one and get down to a single card that we paid off every month.
- Save a little at a time. After our bills were paid each month, we’d see what was left over and if we could eke out an extra $50. Then, we started an automatic savings program to deduct that from our checking account every month, or add to one that we’d already set up. I’ll admit it was hard to commit to save those dollars, when we’d have rather had a nice dinner out. And we didn’t always follow through! But over time, this strategy helped us get into the savings habit. We were able to establish one account for every main goal that we had and were soon seeing our savings build every month. We also committed to save 85 percent of any raises or bonuses and took advantage of our 401(k) plans at work to squeeze out extra savings.
- Focus on staying healthy. Simply put, we couldn’t afford to get sick. I had very little vacation time, and Tony had a job where if he didn’t work, he didn’t get paid. Paying for a gym membership was out of the question. Fortunately, I knew how to cook inexpensive, healthy meals (thank you, Mom!), so we kept our grocery bills low and ate well. Tony would play in community sports leagues, which was a key source of exercise and inexpensive social outings for us. Thankfully, we made it through those years without any major medical issues.
- Underspend on housing. Once things started to stabilize for us, we still chose to rent a tiny apartment for several years. We were constantly asked why we didn’t move to a nicer place now that we could afford to. In hindsight, those few extra years in the apartment were one of the best financial decisions we ever made. It freed up hundreds of dollars each month that we could sock away towards a down payment on our first house — and allowed us to finally establish a substantial emergency savings account.
- Avoid the lure ― and prolonged payments ― of new cars. We’re not “car people,” so we buy mostly used cars and drive them until they die. We have a van that has more than 200,000 miles and could tell some great stories if only it could talk. Even avoiding having car payments for a few months (and saving the difference) can add up over the years.
While those are the basics that have served my husband and me well over the years, we’re always learning and adding to the list. (There are so many retirement planning calculators and tools available that can help you plan.) Example: That old “take your coffee to work to save money” cliché? Well, it’s true. I started doing that about nine months ago when I realized how much I was spending for my favorite chai latte every morning. I still enjoy a visit to the local barista occasionally with my teammates. But, I have racked up the savings and am living proof that sometimes even the most trite advice has merit!
Things are different for us now. Twenty-plus years of (mostly) good habits have allowed us to raise our kids and enjoy life without too many financial detours. But we hope to have a lot of years ahead of us, and so we also hope to continue to stay disciplined in reaching our next set of goals.
We’ll never be “the Joneses,” and we’re perfectly OK with that. Having lived on the financial edge, we treasure the peace of mind that comes from living within our means while continuing to save for the future.
What tips would you add to my list? Use the comments feature below to continue the conversation and help other young couples wisely move forward financially together.
Dai leads the Participant Services group at Wells Fargo Institutional Retirement and Trust, where she oversees the education, communication, and call centers for retirement plan participants.