Very often, divorces are caused by marriage and money issues. But if you start off on the right foot, learning smart budgeting and good money management strategies, you should avoid many problems in the future.

Avoiding debt and saving money are two great techniques for staying financially sound and building a family.

As a financial adviser, I come across young families mired deeply in debt. Typically, families with one or two working spouses who can’t make the end of the month, live on overdraft, and have no savings, suffer from a lack of financial knowledge and go through serious marriage and money problems. Many young people have little experience and/or knowledge on how to manage their money and they end up making several common mistakes that are avoidable.

Sorting out your financial assets first can help to build a happy blended familyCredit: Image: photostock /


Falling into the debt trap

When managing finances, the first step is to stay out of debt. Some debts, like a mortgage, may be unavoidable.  However, be smart as to the amount of debt you take on:  generally, a mortgage shouldn’t be greater than about a quarter of your gross income. Try to lock in today’s low fixed interest rates to avoid the surprise of a teaser lower floating rate mortgage which can then suddenly rise making payments untenable. Don’t take on debt you can’t afford to pay.


Similarly, although there are many beautiful things in the world, if you can’t afford them, don’t go into debt to buy them.   Many young couples look at their parents’ houses and envision living a similar lifestyle. But they forget the important point that it took their parents decades to build up their lifestyle.  Instead of duplicating their beautiful (and expensive) dining room table, consider purchasing reconditioned second-hand furniture.  Create a savings plan, and in the future when you have enough money you can buy your perfect table.   Remember, if you can’t afford it, don’t buy it! 


Poor budgeting

Poor budgeting, or not budgeting at all, is a common fiscal mistake. Until a certain age, many young people’s financial needs are taken care of by their parents. Their parental allowance provides spending money and may even pay cell phone bills.  When working, a young person may feel entitled to buy whatever he wants. However, without a budget and responsible planning, there is no way of knowing how much you can afford to spend.   Log your expenses and income very carefully to find out how much money you really have at your disposal.

Think of the future

Everyone, whether he just entered the work force or is nearing retirement, should be saving.  In addition to retirement savings, put aside an emergency savings account.  Furthermore, insurance plans are important investments that no one should be without.  If you can’t afford to replace or live without it (i.e., your house, your car), you should have an insurance policy.  One cost-effective savings plan is participating in tax-free savings plans through work.  Try to begin a retirement investment portfolio at an early age no matter how small at first. In investments, time is your friend.

Regardless of your age, if you are careful and plan properly now, you can enjoy a productive present and future.


For more tips on family budgeting and money management strategies, read: How to Keep Your Finances and Marriage Together.


Disclaimer: This article is for educational purposes and is not a substitute for investment advice that takes into account each individual’s special position and needs. Past performance is no guarantee of future returns.