Wealth Building For Newlyweds

Getting married is a cherished moment, a special day for every bride and groom. But once the honeymoon ends, newlyweds embark on a lifelong challenge of managing their finances as a cohesive unit. Aaron Howard, 32, and Tekeia Auster, 30, of Cincinnati are no different. Married in July, the couple has not only made a commitment to loving each other, but also to achieving financial independence.

One of the Howards’ primary goals is to reduce their credit card debt, which totals $14,000. Roughly half of that amount was incurred to pay for their wedding. They also want to bolster their cash reserve, which is $2,850. The couple’s most sizeable debt is a $77,000, 30-year fixed mortgage on a single-family home that Aaron purchased in July 2002 for $102,000. In addition, Tekeia has $20,000 in student loans. The Howards’ immediate financial goal is to move into a new house, which they have priced at about $200,000.

The newlyweds are on solid footing to reduce debt because they both have stable jobs and a combined gross income of $78,000. Since 1998, Aaron has been a retirement customer service rep for Fidelity Investments, and Tekeia has been an assistant director of administration with Xavier University for three years. Aaron contributes 5% of his salary to his company 401(k) plan, valued at $63,000, and Tekeia contributes 10% of her salary to her 403(b) plan, worth $25,000. Aaron has another $5,500 stashed in an individual IRA; his wife has $500 in her IRA.

Aaron and Tekeia realized the benefit of laying down a foundation for wealth-building years ago. At 19, Aaron worked summer jobs and put money away but spent much of it paying for college. Tekeia has been saving money since collecting her first paycheck after graduate school.

During the last three years, the couple has been discussing how to approach their financial future collectively. “How can we budget? How can we save more? How can we reduce debt? And how can we better manage our money?” asks Tekeia.

The Advice
To assist the Howards, BLACK ENTERPRISE teamed the newlyweds with David A. Hinson, president of Wealth Management Network Inc. in New York. The Howards are a model for young couples thinking about achieving certain financial goals, says Hinson. The Howards are in their early 30s and already they have a net worth of over $100,000. This places the couple in the top 10% of black family wealth and well ahead of the average American household, which has a net worth of $86,100, according to the Consumer Federation of America.

Hinson offers the following recommendations:
Increase monthly savings. Since Tekeia moved in with Aaron, her only expenses—credit card and student loan payments—add up to $300. Her take-home pay is $1,800 each month, leaving her with a $1,500 surplus. Aaron’s net monthly income of $2,000 covers the mortgage and other household expenses, roughly $1,300. Hinson says it is important for the couple to aggressively increase their savings since they will need funds to purchase a larger house. Saving will also ensure their