PRINT
EMAIL
COMMENT
BUZZ UP
DIGG THIS- Ask Kim - How to Cope With Rising Life Insurance Rates
- Stock Watch - A Safer Way to Tap Emerging Markets
- Fund Watch - Going Abroad for Dividends
- Value Added - Why I Would Avoid Index Funds
- Cash in Hand - Don't Overlook Ginnie Maes
- Money Smart Kids - Financial Literacy for the Whole Family
- Drive Time - Don't Count on Cash for Clunkers
- On the Job - Casting Your Lot With China
- Tax Tips - Tax Breaks for Heroes
- More
Four words no one wants to hear soon after his or her wedding day: "We made a mistake."
I’m talking about financial choices -- not your choice of spouse. Unfortunately, many newlyweds set themselves up for failure soon after they say "I do." If you bring bad money habits to the marriage or fail to come up with a plan to merge your financial lives, you could potentially doom your relationship to money trouble -- and endless arguments. Not exactly "happily ever after."
RELATED LINKS | |||
 |
Secrets to Marital and Money Bliss | ||
|
|
10 Questions to Ask Before Saying ‘I Do’ | ||
|
|
A Primer on Prenups | ||
However, nothing says "I love you" like the desire to start your marriage on the right financial foot (roses, schmoses). Here are six common pitfalls that trip up new couples. Steer clear of these, and you'll decrease the money tension and increase the harmony in your new life together.
1. Keeping money secrets
Money is one of the most common sources of arguments in a marriage, so it's best to simply avoid the subject altogether, right?
Wrong! Some of the most heated arguments stem from failing to discuss financial backgrounds, expectations and attitudes from the start. Communication is key to the survival of any relationship, and bearing your financial soul to your partner is no exception.
Ideally, you want to have this conversation before walking down the aisle. After all, there are good marital surprises ("Didn't I tell you I'm a gourmet chef?") and bad surprises ("Didn't I tell you I have $20,000 in credit-card debt?"). Full disclosure is in order here -- and that includes your shoe fetish or gambling habit. For tips on what to discuss, see Ten Questions to Ask Before Saying 'I Do.'
2. Not having a budget
Now that you're settling into your new life together, it's time to discuss the b word. No, not baby. Budgeting. You're merging two spending habits and two saving habits into one household. So even if you had a budget when you were single (pat on the back), you've got to make a new one with your husband or wife to include his or her income, debts and monthly expenses. That will help to ensure you have enough money left over for that other b word -- Bahamas.
Use our budget worksheet to start. Your first step is to write down your fixed expenses -- such as your rent, car payment, insurance premiums and student-loan payment. You should also make a habit of contributing to your savings or investments as if you were paying a fixed bill each month. Then write down your flexible expenses, such as utility and phone bills, transportation costs, groceries, trips to the ATM, and miscellaneous purchases. Track your actual spending for a couple of months to see where your money really goes, then find the spending leaks and plug them. Building a budget is a great way to set common spending and saving goals, identify problems, and work together to fix them.
3. Giving one person the financial reins
The honeymoon's over, and it's time to get down to the nitty-gritty of the daily finances. Who will physically pay the bills, monitor the investments and crunch the taxes? One person may be more inclined toward these tasks, or you may decide to split the responsibility or trade off each month.
There's nothing wrong with letting one person take over the family finances, as long as both partners are okay with that decision. But that doesn't mean the other partner should be excluded. It's important for each person not only to feel involved in the big financial decisions but also to have an understanding of the day-to-day finances. You each need to know all your different account information, passwords and bill due dates in case anything were to happen to the other person. And no matter how you divide the responsibility, it's a good idea to have a regular "money date" each month or so to make sure each of you is in the loop. You should go over your budget, review your savings progress and discuss upcoming expenses together. How's that for keeping the romance alive?
Also, if you choose to combine your finances after you wed, make sure that major purchases and savings accounts are held in both of your names so that each of you has equal access and can maintain a credit rating. You don't want to find out in the event of a divorce that your name wasn't actually on the car title or savings accounts.
4. Dragging debt down the aisle
What's his is hers, and what's hers is his. Whether you decide to combine your finances or maintain a separate approach, if one of you brought debt into the marriage, it becomes a problem for both of you. You'll need to work together to come up with a plan to pay it off. However, you should never officially commingle your debt. Doing so could hurt the credit score of the other partner and make it difficult for one or both of you to get credit later. Keep existing credit-card and loan accounts in the original holder's name.
If you can help it, it's best to avoid beginning your marriage in the red. Many newlyweds make the mistake of going too far into debt to pull off the wedding of their dreams, go on an exotic honeymoon, or buy brand-new furniture and appliances for their home. Before you dig too deep, you should sit down together to determine which expenses are necessary and which are worth a splurge -- and come up with a plan to pay for it all before you spend it.
5. Sweating the small stuff
Marriage is about compromises and simply letting some things slide. So she squeezes the toothpaste tube from the middle, and he doesn't pick up his socks. Big deal. You'll both soon learn to pick your battles and save your energy for issues that really matter.
That goes for picking your money battles, too. I remember my first financial argument with my husband. We had been married two weeks, and we were doing our grocery shopping together. He wanted to buy the brand-name chocolate chips, and I felt strongly that we should save 75 cents and go with the off-brand chips. After a lengthy and heated exchange, we divided up the rest of the shopping list so that we wouldn't have to look at each other for the rest of our outing. Then we drove home in a huff. Lesson learned: Never go grocery shopping when you're hungry, tired and irritable. Oh, wait. Financial lesson learned: Don't sweat the small stuff. Was the argument really worth 75 cents? No way.
Of course, if all the little stuff is adding up to a big drain on your finances and causing you to live beyond your means, bring it up at your next money date and work together to find ways you can both cut back. (Ah, there's that compromise idea again.) But take note: It's important that you build a little "mad money" into your budget for each person to spend at his or her own discretion. (Can you imagine asking your spouse for permission every time you wanted to buy a cappuccino and a muffin, or grab a drink with some friends after work?) But as far as the big stuff goes, make it a rule to consult the other on major purchases. You don't want to come home and unexpectedly find a brand-new Mercedes in the driveway, and the bill that goes with it.
By the way, I now go grocery shopping alone. We decided as a couple it's what's best for our marriage.
6. Failing to plan for an emergency
No one likes to think about bad things happening, but in all the excitement of your engagement, planning your wedding and moving in together, it's easy to overlook this important aspect of financial planning. One of the best gifts you and your spouse can give each other is financial security and protection from life's storms.
First, assess your emergency stash of cash. Every couple should have enough money available to cover from three to six months’ worth of living expenses. You never know when the car will break down, one of you will lose a job or you'll have an unexpected medical bill. Learn more about how to build your financial foundation and where to keep the money.
Then, you need to make sure you have adequate insurance coverage, including health, auto, renters or homeowners, and possibly life insurance. Learn more about the types of insurance everyone should have, and how to get the appropriate coverage.
Did you get married without a prenuptial agreement? It's not too late to protect the financial interests each partner brought to the marriage. Consider drafting a post-nup with your lawyers. Plus, make sure you each have written a will to divide your assets in the event of your death.
SEE ALSO: Secrets to Marital and Money Bliss
Editor's note: This story has been updated since it originally was published in 2006.
POSTED BY: Dick (May 04, 2009 05:19 PM)
This is all good advice. The advice should not be limited to newlyweds. All married couples (and maybe others) should stick to these rules. They make good sense.........
POSTED BY: sd (May 05, 2009 05:10 PM)
I agree with you 100%, Dick! I am juggling my two sons, a full time job, responsibilities with my home, and having to keep up with all the finances. I can't keep up anymore. My husband continues to spend our extra money on beer and cigs. I am so tired of having to deal with this. My children need clothes. And I do too. And it's not like we don't make very much money. We make plenty of money. My husband just spends it all while my income sits in the bank awaiting to pay the bills. I resent my husband very much. I have tried to talk to him time and time again about the whole situation, and nothing positive ever comes of it. Not sure what to do anymore.
POSTED BY: Carissa (May 06, 2009 08:34 AM)
To sd,
My husband and I got on the wrong foot when we started our marriage without having a budget and spending too much when we didn't have it. We recently moved to Houston and started a new church that offered a Dave Ramsey Financial Peace course. It highlights the areas this article spoke about and taught couples how to be financially responsible in planning and budgeting TOGETHER. Since taking this class only a few months ago, we have paid off all our credit cards! Now we are working on student loans. The class was free and most churches offer it, but there are also Dave Ramsey books for $30 at any bookstore that you all could read together to come up with a plan for your finances and your marriage. Good luck.
POSTED BY: AGH (May 14, 2009 07:53 PM)
For the past year my wife and I have been separated because she is so irresponsible with money I felt the only way to get control of money was to separate households. We're near divorce-tried everything, talking, budgeting, compromise, nothing seems to work. When I asked her what solutions she thought might work she just said "whatever." Can't make irresponsble people, responsible. Good riddance!
POSTED BY: Antonio (May 30, 2009 10:54 PM)
Yeah all of these make good sense, and they are definitely a few I've fallen guilty to. Its okay though, because maybe I needed to see it for myself, well for ourselves.
Reprint Article
