When the Wedding Bells Stop Ringing
June 18, 2014For centuries, June has been the most popular month for weddings. The idea of two people vowing to share the rest of their lives together always puts a smile on my face, but are these two souls that have now been joined as one fully prepared for what lies ahead? I should think that a person that says “I do” does so with no thought of some day thinking “I don’t,” but the reality is that many of these newlyweds won’t be together in 20 years.
One thing that can turn “happy couples” against each other is financial trouble. In fact, Sonya Britt of Kansas State University says arguing about money is the top predictor of divorce. Susan and I are no strangers to money fights, but by the grace of God, we’ve managed to stay together for the last 19 years. While it hasn’t always been a bed of roses, here are some things that we have done to make life together more tolerable:
#1 Make financial goals together
When Susan and I exchanged vows, we performed a ceremony called “the lighting of the unity candle.” This symbolic gesture represented our two lives joining together as one. In doing so, each of us had to give up our sense of individualism for the sake of our marriage.
In the same way, when it comes to our financial goals, we have to be willing to work together toward common goals that benefit the marriage, not just ourselves. Now that’s not to say that each of us can’t have personal goals that we would like to achieve, but as spouses, it is important that we agree on the priority of such goals and be willing to compromise rather than taking the position that “I deserve it.”
Resource: Setting SMART Goals Worksheet
#2 Build a monthly spending plan together
Another reason setting goals is important is so that you can be in agreement as to how the money is spent. It’s not that unusual for one of you to be a saver and the other to be a spender. But absent goals, the saver may resent the spender, and vice versa.
To alleviate this problem, couples should work together to align their spending with their financial goals. For example, we have a number of home improvements we would like to do, but we can’t afford to do them all at once, so we need to prioritize which ones get done first. Also, we enjoy summer vacations, so a portion of our income goes to that goal as well. (Remember, saving is future spending, so putting money in savings is treated as an expense on our spending plan.) One thing we don’t do is claim “his” and “hers” when it comes to income. We treat all of the income as “ours,” and that has worked well for us.
Resource: You Need A Budget
#3 Put goals on autopilot
It’s best to put away savings before you even have a chance to spend it. For short- and intermediate-term goals like buying a car or a home, see if your payroll department can make a direct deposit to a savings account (preferably someplace different than where your checking account is). For longer-term goals like college and retirement, set up automatic contributions to a 529 plan and/or an IRA, and contribute to company-sponsored plans like a 401(k).
Early in our marriage, Susan and I made a goal to save six months’ worth of expenses in an emergency fund. To accomplish this, I had a portion of my paycheck directly deposited to an online savings account. We were able to accomplish our goal within a few years and since then, it has helped us when we’ve run into unexpected financial pitfalls.
Resource: Five Steps For Building Wealth Automatically
#4 Monitor your credit
When we got married, Susan and I joined our bank accounts and credit card accounts, but one thing we could not join was our credit history. If we planned to own cars and homes together, we were going to have to apply for credit together, so each of us needed to know what the other’s credit report looked like so that we could work together to make improvements as needed. In fact, I spoke to a young man a few months ago whose fiancée would not set a wedding date until he cleaned up his credit. Now how’s that for thinking ahead?
Resource: What’s on my credit report and how do I order one?
#5 Review your benefits
One of the first things I did after we were married was add Susan to my health insurance. That’s because a marriage is considered a status change for most employers’ benefit packages. Review your benefit package to find out if you can save money by putting a spouse on your health insurance or enrolling in a flexible spending account.
You will also want to update your beneficiaries on your retirement accounts, bank accounts, and insurance policies to make sure the right person/people are named. These beneficiary designations even trump documents like a will. Imagine the trouble I would have caused if I left my mom as the beneficiary of my IRA instead of changing it to my wife?
#6 Schedule time for “money talks”
When you boil it all down, the number one reason for couples to split up is poor communication. That’s why Susan and I are regularly getting together to discuss things, financial and otherwise. Do not neglect your spouse’s need to hear and be heard. The better you are at communicating with one another, the less likely you will be caught off guard by surprises—that goes especially for financial decisions.
Take 15 minutes each week to discuss what financial activity took place and determine if any course of action, such as modifying the spending plan or creating a new financial goal, has emerged. Once a year, take more time to review your goals and your progress toward meeting those goals. Try to keep these “money talks” to times when you are alone, free from distraction, and alert (that means after 10:00 pm but before 11:00 pm at my house).
And finally, be patient, forgiving, and flexible, and for goodness sake, celebrate when a financial victory is achieved. That doesn’t mean racking up $500 on your credit card after paying off $50,000 in student loans, but reward your hard work in an equitable way. Building momentum and making it fun is the best way to keep the wallet and the marriage happy.