Statistics: Money Arguments
- According to Smart Money magazine, more than 70% of couples talked to their partner about money at least once a week.
- However, money remains the No. 1 issue that couples argue about.
- Study respondents said they argue most often about
- Debt;
- Spousal spending, and
- Their own purchases.
- They worried about
- Saving for retirement;
- Taking risks with investments, and
- Loaning money to the kids.
You have spent months preparing for the perfect wedding day, picking a venue, choosing a caterer, finding a photographer and planning the perfect seating arrangement, all in an effort to have the wedding experience that lasts a lifetime. More often than not, people get so caught up in the wedding, that they often overlook one of the leading causes of divorce: money. You spend months planning for one day, only to lose track of planning the financial aspects of the rest of your life with your future spouse. Before the big day, take some time and discuss finances with your partner to ensure a long and healthy marriage.
Talk About Finances
A common mistake young couples tend to make is not discussing money and finances before tying the knot. Many assume that life will continue as normal after they are hitched. The first time a problem appears is when the two go to finance a car or home and one partner’s credit is subpar, derailing the purchase. Many couples do not speak about finances or know what to expect after marriage, which is why financial planning should be a high priority. Both partners need to be open and honest about their financial situation. Credit scores, income, debt, and monthly expenses need to be on the table, so there are no surprises waiting for the couple. It is important for both partners to know the overall financial picture. They can then take steps to improve credit scores and pay off debt before finances are merged after the big day.
Make a Budget
Establishing a budget is the next critical step to take before marriage. Both partners need sit down and calculate monthly expenses and income and plan how to pay the bills. There are many ways to do this. You can establish a shared checking account for bills, or divide the bills equally with each person paying their agreed upon share. It does not matter how it is done, but it should be a high priority. Knowing monthly expenses and discretionary income should allow the couple to live within their means and begin to establish some savings, keeping heated exchanges about spending to a minimum. The spender learns financial responsibility by keeping spending within the budget. Both spouses can come together to save their discretionary money for big purchases.
Plan for an Emergency
Now that you are hitched and your households are combined, you should be able to save on living expenses. It is important to save some emergency reserves equivalent to a few months pay. This will allow a cushion if one partner should lose their job, or unexpected medical expenses, car repairs, home repairs, etc. should occur. It is easier to adjust to a change if there is a small buffer before drastic lifestyle modifications are necessary. Having extra cash available just makes sense.
Pay Off Debt
With a solid financial foundation and understanding, the couple can make efforts to pay off excess debt. The pair can tackle student loans, credit card debt, and auto loans together, brightening their financial outlook. Eliminating debt allows the two to focus on saving for retirement, beginning a family, or purchasing a home.
Get Insurance
After the wedding, nobody wants to stop and think of anything bad happening to their partner, but you both must be aware that it could happen. Part of planning for an emergency also includes insurance if a spouse were to die or become disabled. You are much more likely to become disabled than you are to die, so disability insurance should be a priority—preferably an own-occupation disability policy. If you are disabled and unable to work, such a policy often can replace up to 60% of your income. Be sure to discuss insurance and get a policy that covers both partners in case of a disaster.
Generally, life insurance for a young couple is not as important as a disability policy. However, if a surviving spouse would not be able to make mortgage payments as a result of the death of the other spouse, you should consider a policy to provide enough for the monthly payments until the house could be sold. Term life insurance should replace income, particularly if only one spouse works.
Also, if one partner has better health insurance through their employer, you should add your spouse to your plan.
Plan for Retirement
Hopefully, when the budget is established there will be money left over after paying bills to begin saving for retirement. This is very important step for the couple to make. The earlier the two of you begin saving, the more you should have when you reach retirement from the compounding effects of interest. While saving for retirement, the pair must evaluate their risk tolerances. Sometimes one partner is willing to take on a lot of risk, while the other is risk averse. This can be beneficial, if the two have separate accounts. One can take on more risk, while the other invests conservatively. The two portfolios will serve to balance the other’s risk. However, over time (as retirement nears), steps should to be taken to limit the amount of risk to your savings. If one partner wants to invest in assets deemed “risky” by their spouse, consider allowing it in an account that is not a dedicated retirement account. “Risky” investments can have major consequences to your financial security as you age.
Don’t Keep Financial Secrets
Keeping a secret from your spouse can lead to trust issues and spill over to other aspects of your relationship. Keeping a financial secret from your spouse can be just as devastating, especially if it involves losses. In most cases, it is not if they find out, it is when. When they do, they probably will wonder what else has been hidden. Keep it simple, don’t keep financial secrets from your spouse.
Hopefully, we have given you something to consider before tying the knot. We hope that your marriage and lives together last a long time. Here are a few more items to consider after the big day. Make a will. If your name changes, be sure to update your driver’s license and social security card. Remember, to continuously update your financial goals.
At Henssler Financial, we believe you should Live Ready, which includes being ready to merge finances when you marry. If you would like to talk to one of our experts regarding your young family on the path to prosperity, or to ensure that your plans are designed to get you to your goals, call us at 770-429-9166, or e-mail us at experts@henssler.com.
Disclosures
All material presented is compiled from sources believed to be reliable and current, but accuracy cannot be guaranteed. The contents are intended for general information purposes only. Information provided should not be the sole basis in making any decisions and is not intended to replace the advice of a qualified professional, such as a tax consultant, insurance adviser or attorney. Although this material is designed to provide accurate and authoritative information with respect to the subject matter, it may not apply in all situations. Readers are urged to consult with their adviser concerning specific situations and questions. This is not to be construed as an offer to buy or sell any financial instruments. It is not our intention to state, indicate or imply in any manner that current or past results are indicative of future profitability or expectations. As with all investments, there are associated inherent risks. Please obtain and review all financial material carefully before investing. Henssler is not licensed to offer or sell insurance products, and this overview is not to be construed as an offer to purchase any insurance products.
