Getting Married? Here are some Financial Topics to DiscussSubmitted by Tidemark Financial Partners on August 6th, 2018
With marriage comes the promise of a life of happiness. However, once the honeymoon is over, newlywed couples must face the reality that their marital union is also a financial merger. Money issues are one of the primary causes of marital problems, especially when there is no strategy to guide a couple through the multitude of financial decisions that must be made on a daily basis. Nothing short of a prenuptial financial plan can prevent the inevitable conflicts inherent in money issues. The emphasis of such a plan should be placed on a thorough discussion of shared values, beliefs, purpose, and how they define happiness, which will form the backbone of all their financial decisions. Before tying the knot (or at soonest possible opportunity
Yours, Mine and Ours Money
For many newlyweds, opening a joint account is a ritualistic validation of their marriage. While it does make sense to centralize management of some aspect of a couple’s finances, issues may arise when one of the spouses takes primary control of the management of the account. Also, it’s not uncommon for couples to bicker over spending habits with both watching the checking activities of each other. It is important for couples to recognize that they are also individuals with a need to exert some level of individual control over their personal finances. Financial counselors recommend that, in addition to a joint account, couples establish individual accounts to allow them to manage some of their own personal expenses. More importantly, couple need to develop shared values about money along with a spending plan they both agree to.
Yours, Mine and Ours Debt
It’s not unusual for couples to bring their own individual debt into a marriage. The problem is when most of the debt originates with one of the spouses. It can become a deal breaker when that spouse doesn’t disclose that debt prior to the marriage. If a marriage starts with debt, regardless of the source, the primary goal should be to eliminate that debt as quickly as possible. Ideally, a couple should strive to become debt-free prior to marriage. Couples should have a forthright discussion about debt before they get married and establish goals and a spending plan to get out of and remain out of debt.
Establish a Strict Spending Plan
We all know the theme - a couple bickering over a revelation that one or the other has purchased something totally impractical without the other's knowledge. Many couples might be able to get beyond the anger over the occasional impulse purchase or overspending on budgeted items; however, it's when it occurs more frequently, in small, almost undetectable pieces, that can send couples over the emotional and financial edge. The most important thing a couple can do is to agree on spending limits in all budget categories, which should include an amount for each spouse to spend as they wish each month. Critical to establishing a realistic spending plan is to build it around a clearly defined savings goal - setting aside the targeted amount of savings each month before any spending occurs.
Prepare for the unexpected
Nothing can disrupt the best laid plans more quickly, and often more devastatingly, than the unexpected. It happens to each of us; so, that means, for married couples it can happen twice as much. The failure to expect the unexpected - medical emergencies, accidents, job loss, natural disasters, etc - inevitably leads to financial trouble. The very first savings goal a married couple should target is to establish a cash reserve emergency fund that could fund 12 months of living expenses if needed. Equally important is to purchase the right amount of insurance coverage for their property, their incomes, and their lives.
Couples at any stage of marriage can avoid the painful experience of fighting over finances by openly discussing their views on money and the values that will drive their decisions. Only then can they do the more important work of planning for their financial security and managing their money for financial success.
The opinions voiced in this material are for general information only an dare not intended to provide specific advice or recommendations for any individual.