Marriage is an exciting milestone! You and your new spouse probably can’t wait to start your lives together, and that includes combining your finances. Investing with another person can give you an elevated sense of security, but that doesn’t mean you can ignore potential pitfalls.

Disputes over money matters are a leading cause of divorce, and you don’t want to dissolve your union over a risky investment. As you begin looking for ways to make your money grow, do so wisely. Here’s a simple guide to help you on your way.

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Investments You Should Make

Some investments make sense for newlywed couples. Your new financial situation gives you a few distinct advantages. With that in mind, make these money moves with your partner after tying the knot.

1. Bolster Your Emergency Fund

If the COVID-19 taught society anything, it’s how to prepare for an emergency. You never know what unforeseen event could land you in the unemployment line unexpectedly.

Most experts recommend that you have between three to six months’ worth of income saved. However, if you work in a highly specialized field where competition for available positions is steep, you may wish to stow away more for added peace of mind.

2. Pay Off Debt

Now that you are married, you become jointly responsible for all debts incurred after saying “I do.” However, if you or your spouse owe outstanding amounts from before marriage, why not tackle these together?

Start by paying down the credit card or loan with the highest interest rate first, then move on to the next. You can also alternate months, devoting any extra to one spouse’s debt one month, then switching the next.

3. Buy a Starter Home

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Home-ownership does present more headaches than renting when it comes to maintenance, but it has one distinct advantage. After you pay your mortgage off, you lose what is typically your most significant monthly bill. This extra cash comes in handy for retirement or sending kids through college.

While you may need to make some compromises on buying your starter home, real estate tends to appreciate. You can always sell later and use the profits toward a down payment on your dream abode.

4. Max Out Your Retirement Funds

The federal government has raised the contribution limits on many retirement accounts, so if you have the ability, maximize these savings. Who knows? Maybe you and your spouse can afford to retire early if you play your cards right.

5. Dip Into the Stock Market

In the long haul, the stock market tends to outperform savings, and right now is an ideal time to invest. The market is down due to the COVID-19 pandemic, but it will bounce back when things return to normal. In the meantime, if you have the extra cash, you can score some impressive deals and reap the returns over a lifetime.

Investments You Should Avoid

When it comes to money, there’s no shortage of unscrupulous advisers who promise and don’t deliver. While it’s okay to include some higher-risk investments in your portfolio, you should avoid others at all costs.

1. Dubious Tax Shelters

Ever since the income tax originated, some people have questioned it. Unfortunately, the law is the law, and whether you like it or not, you must pay taxes. That doesn’t keep some companies from initiating risky tax protest scams that can leave you on the hook to the federal government.

If somebody tries to entice you into a complicated scheme that promises to reduce your tax liability, proceed with caution. Better yet, run in the other direction. The IRS will find you if they deem these practices unallowable, and they do have the authority to take your home or business.

2. Timeshares

You love Cabo, and you plan to spend a vacation there every year. Why not buy a little slice of paradise in the form of a timeshare? Unfortunately, if your financial portrait ever changes, you could risk losing a lot more than your holiday spending cash.

On average, a timeshare foreclosure drops your credit score by 100 to 150 points, sometimes even more. Plus, it can make it more challenging for you to obtain another mortgage for up to seven years. Unless you have the money to purchase a second property outright, save up for your vacations instead of diving in with this investment.

3. Stock Options or Futures

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Futures are contracts that obligate you to act on an asset at a predetermined date. While these investments work well for those with big pockets who can afford substantial losses, they can devastate small-time investors.

That’s because you are obligated to pay on the assigned date regardless of the asset’s market value. What starts as a risk of only $10,000 can leave you $100,000 or more in debt.

Invest Your Money Wisely for a Happier Marriage

You don’t want economic woes to shatter your new union. Follow the tips above when making investment decisions with your spouse, and enjoy building your wealth together.

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