Managing Money – Part 1
Getting Married? – More Managing Money Issues – More Matters To Discuss
For those of you who are newly married, does this fairy tale describe your life together? It begins “once upon a time, you each discovered that very special person that you wanted to be with forever, and then you both rode off into the sunset”. It doesn’t?
Well, if you set aside some time at the beginning to discuss managing money and finances, you’ll have a much better chance to have a real fairy tale ending. This may sound like over simplification, but the non-romantic topic of money, should be discussed early on.
One financial planner says that it’s more important to discuss managing money issues than sex. I’m not sure I agree completely on that one, but she’s right,
money issues are very important.
Couples, before they’re married, need to sit down and get the issue of managing money on the table, and resolve to discuss it on a regular basis in a constructive way. A detailed listing of the assets owned and especially any debts that will be coming into the marriage, and that includes student loans as well as credit cards, should be available.
Being able to discuss managing money openly and comfortably is what each spouse should strive for. If you can also discuss the topic as to how the parents handled and discussed money, this is helpful too, but at this point, don’t go into great detail. From reviewing the assets and debts of each spouse, they should be able to determine who is the spender and who is the saver.
One engaged couple was going through the pre-marital discussion phase and it was discovered that her credit score was about 100 points lower than the future husband, who had a credit score of 800. However, he had outstanding credit card debt of $10,000 plus a sizable student loan, and didn’t want his future wife to be saddled with them.
His fiancée felt differently however, and said that they were a team and would deal with these issues together. They also discovered that even after they got married, each spouse would be able to maintain their own personal credit score. Even though her score was lower, the only time that it would directly affect his would be when joint purchases were made such as cars and a home.
The obvious solution was for the wife to raise her credit score by starting to pay her bills on time. They would hold off making any joint purchases until her credit score improved. By cutting back on discretionary purchases, they planned to pay extra each month on his debt until it was all paid off. With the student loan, they felt that the additional education would pay off by an increase in wages.
It may take longer than anticipated to have all managing money issues satisfied, but they are both willing to work at it. Because they made full disclosure at the beginning of their marriage, it got them on the right track, and were able to make the necessary adjustments to the way their money was handled.
Another decision to make is whether a couple should keep their accounts separate or merge them into joint accounts. There is no universal right or wrong answer to this question. Whatever way works the best is the one the couple agrees on together.
This couple had been married for three years and decided on having joint accounts because for them, it was easier to get a handle on their expenses. They felt that it made everything more transparent in that each knows how every thing is spent and can ask a question if they need to.
Another couple had the opposite feelings and opted to go the individual account route thirteen years ago. The primary reason they opted for individual accounts was that the wife was pursuing a doctorate degree in New York and the husband started a job as a professor at a university in Kansas. Living apart as they had to do for the first part of their marriage, made the decision for separate accounts the best way, and since it worked, they kept that method.
A third option is to have a combination of both methods, some joint and some individual.
This couple, who got married, had some difficulty in merging everything they each had into one big joint account, so they kept those accounts individually and opened a joint account for all new purchases. The main reason this one works is because both spouses agree on it and support each other.
A financial planner in Maryland agrees on a variation of this concept, and suggests that both spouses make a separate listing of expenses that they will be sharing. They then merge both lists and each one contributes an amount to a joint account that is proportional to his or her income.
This same planner thinks that each spouse needs to have their own money because it permits them to have a feeling of autonomy. I agree in part in that each spouse should have some discretionary money to spend without being accountable, but a marriage is a joint union, not a union for two separate individuals to go their own way. The most important matter is for the couple to discuss managing money openly and in a constructive way.
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Wow, I totally agree. My husband and I attended Dave Ramsey’s FPU very early in our marriage and it really opened up communication not just about finances but other goals and dreams. Every new couple should get their ideas about money squared away in the beginning.
Great post, it’s very difficult financially getting married and even harder trying to sort out the finances, this post really struck home and thank you very much for the information
I think financial matters, other than the cost of a wedding and honeymoon, are topics most starry eyed couples avoid because they see talking about it as a negative. It’s as if to talk about financial matters will jinx their future together and actually bring on debt and money troubles. Of course with no financial plan you invite debt and the money troubles that come with it.
Having a mutually agreed to family budget, an agreed to investment strategies, a plan for saving towards a home and education, and so on are all necessary things to have sorted out prior to, or just after being married. But I want to caution everyone to occasionally revisit your financial strategies. Things change with time, both for the good and the bad. Thankfully my husband and I weathered the 2008 collapse well and raises have necessitated us taking another look at our plan and changing the amount we put aside in tax sheltered retirement investments. However my sister and her husband were hit hard because they fell for the pitch of a commissioned mortgage broker and bought too much house during the subprime scandal. Of course when the crunch came in the form of increased interest they got into trouble, trouble that was added to with my sister being laid off. The difficulty was compounded because they did not toss out their plan made before they bought the house and come up with another. Instead they just accepted they’d have to live day to day, with no plan needed until things improve. Of course they didn’t improve, and the stress turned them against each other. They are now separated and both are even worse off. Two spend less living together than they do supporting two households, especially when both are supported by a single income. So planning is good, totally advisable, but while coming up with your plan agree you’ll reexamine it every year, or whenever necessity dictates and do so.
The #1 reason for divorce is financial issues. It’s so important to get the money situation properly planned for before getting married, and to keep good communication during the marriage. It’s scary what can happen if you don’t…
Totally agree with Ron. It’s best to get it all situated in the beginning and come up with a game plan early in the marriage. We check in on a montly basis to talk about what we spent/saved. That way if we need to watch the next month, we are on the same page. It has saved a lot of trouble over the years and a lot of arguments. Plus we have a rule. If we are going to spend over $100 on something (not for the house or a bill) we run it by each other first. We have never vetoed each other, but it makes me think about each larger purchase I would want to make before I bring it up. Usually I will realize I don’t really NEED it and would rather save that money.
Money management is a very serious issue in marriage. Proper management of money is a boost to a successful marriage, and any marriage without proper money management is bound to break.
It is also advisable for a couple to plan how finances will be managed at the onset of their married life so as to avoid unnecessary arguments that may lead to the couple going separate ways.
I never understood why you would need separate accounts until now. However, I think each couple needs to figure out what works best for them. As long as you are open and honest with each other, that is what really matters.
This article is very enlightening to me, and even though I’m already married I’m hoping my husband and I can take some time to have a discussion like this. Right now, we keep seperate accounts, with one joint account for mortgage, bills, etc… but unfortunately I’m the only one contributing to it. My credit score is a little low because of my student loans, and because of that all of our utilities and our mortgage fall under his name. Now, there’s no way for me to get to the level where I can think about paying off all of my debt because I’m stuck paying all of our expenses. I wish we had come to some kind of agreement or made some kind of plan when we first started out together, because now I’m feeling trapped and taken advantage of.
My situation is much like Elizabeth’s above. I’m already married, but I’m hoping that it’s not too late to have a conversation like this with my husband. I came to the table with a lot of student loans, while he didn’t have any, but at the same time I have a much higher income. Still, after paying all of our household bills and expenses, which have been growing as he becomes more accustomed to living off of my income alone, I haven’t had the opportunity to even touch my debt! I’m feeling trapped and overwhelmed, and I don’t want resentment to ruin my marriage.
I really agree! I am talking online to an old friend of mine that is graduating college(we are both in our thirties.) We have wildly different views on money so that is something we will definitely have to discuss! I think a good way to go is to have one account, but agree each gets a set amount every month for their own spending.
What do you recommend for couples where one spouse makes way more than the other and feels they should be the VP of finance for the family because they make more money. Meanwhile, the other spouse has to justify every penny spent. My husband and I have decided on separate accounts for this exact reason. The problem is, he has way more disposable income after the ‘shared’ expenses are addressed. I feel like this is not fair.
The only fair solution is to share the expenses as a percentage, and I don’t mean 50/50. As an example, if his net pay is 1,000.00 and yours is 500.00, then he should contribute 67% and you should contribute 33%. You might also want to revisit the expenses that have been allocated as shared expenses.
There is no doubt, money management is one of the more important aspects in our lives. No one wants to live life in poverty and debts, thus managing money is very vital. A couple must understand each other, they must create strategies that suit their needs, and work together.
Yes i really agree with you, money management should be discuss more often than sex because most couples just discuss sex and all the good things of life and forget about money management.