* Post-Nuptial Money Management
The only time money is an issue is when there isn’t enough money. Nowhere in life is this more true than within the confines of a marriage. As Winter melts into Spring and your June wedding draws near, now is a good time to do some planning; before all the planning begins!
Love is many splendored thing, the old song tells us. What it doesn’t give us a clue about, is that it is also a business.
Once married, every purchase and every payment will affect you both, your finances are now forever intertwined for good or for bad. For most of us, the biggest purchases of our life will be made together, and money decisions from whether or not to spend $6 for a darn latte to how much to spend on bedroom furniture are a daily part of married life. After a divorce, bankruptcy, remarrying, buying a few businesses and several houses, this practiced husband offers a few simple strategies to help prevent money – or the lack of it – from becoming one of the challenges you have to face in your marriage.
Talk about money now. Money issues have broken up more than one engagement, and if it is going to happen it would be better now than after you’ve spent thousands toward the wedding. Talk about your visions of marriage money management to learn about each other’s initial expectations, giving you a basis upon which to build.
Sometimes couples try to keep things separate, each paying half of the rent and portioning out the bills. If you make about the same amount of money and it is more money than you need, this can work, but usually at some point it just becomes easier to break down and open that joint checking account … which is the first thing you should do ASAP.
Even if one or more of you is planning to alter their last name after the wedding you can still open a joint checking account now and print whatever names you want on the checks, as the bank mostly uses your social security number. (You’ll have to come back to the bank with the official change of name form later.) Either each put a hundred dollars in the account and leave it dormant until after the nuptials, or go for it and put the money for the wedding in that account and spend madly. Either way, having this done ahead of time will make things easier after the honeymoon.
If you are already cohabitating this will be a bit easier than if you aren’t yet: Make a household budget. Don’t put it off any longer! If you will be moving into a new place you will have to estimate utilities, and you should estimate high. Add estimates for groceries, going out, car and student loan payments, car insurance, repairs and gas. Now add another two hundred dollars for groceries because that has to include toilet paper and soap too. OK – add it up.
Now without worrying about who is going to contribute how much, in simple arithmetic, do you together make more than the total of your budget? If the answer is no, or we might be able to squeak by, do not get married.
Or rent a much cheaper apartment or sell a car or make more money. But do not enter into a marriage with built-in money problems – you won’t make it.
Remember: All You Need is Love – and enough money.
Once your projected income is a bigger number than your projected expenses, talk about how each of you will participate in money management. Who will pay the bills and how will that be done so that you never miss a payment and you both have access? What kind of records will you keep; paper, digital, or both? Who will keep them and how will they be archived? Your roles can change as often as needed over the course of a marriage – just make sure someone is doing things in a way that makes you both comfortable.
Be very careful with credit cards. It isn’t a competition and more isn’t always better. You may want to have a joint card attached to your joint account and you may want to each have a couple other cards. Pay attention to the interest rate on each and only use them for emergencies unless you can pay them off as each statement arrives. If you don’t have a credit card yet and not enough of a credit record to get one, obtain a ‘secured credit card’. The idea is that you send the credit card company a couple hundred dollars and they send you a credit card that you can use as long as the balance owed on the card is less than the amount you sent them. Just charge what you can afford to pay off each month, even if it is just a soda, and your credit rating will rise.
As much as you can, whenever you can, pay a little extra. This goes for mortgages, car payments and credit card payments. During the first few years of a mortgage almost everything you send is applied to the interest you owe the bank, and very little is applied to the principal amount.
For example, on an initial mortgage payment of $1073, $833 goes to the bank, and only $240 is deducted from the amount you borrowed. An extra $20/month subtracts another $240/year from the principal and the bank gets none of that. Credit cards are a bigger trap because the interest rate is three or four times as much as it is on your home loan. That $300 tablet will cost you $400 or more if you don’t pay extra on that bill.
Open a separate vacation savings account and put at least $5 into it each paycheck, no matter what.
Pay someone to do your taxes that really knows how to do taxes. If they can’t figure out how to save you enough to pay for their services, find someone else.
Beware of things that only cost $12/month or three EZ payments of $19.99. One day you can be doing fine, living within your budget, life is good. A month later you don’t have enough to pay the light bill, your partner is giving you that look, and all you did was add HBO to the cable service, buy some awesome team tailgate gear you saw on TV, and donate $25 to PBS. What went wrong? If you want to have HBO, add it to the budget, make sure the numbers are still OK, and discuss it with your spouse. A decision made together cannot come back to haunt only one partner. That’s Marriage 101.
If you are lucky enough to work for an organization that offers any sort of IRA or other retirement plan, join immediately and contribute until it hurts. You have your whole life and marriage ahead of you now and retirement is something for old people. In two clicks of a mouse your kids will be grown and gone, and that account might be the difference between retiring comfortably and merely existing.
Marriage can be a truly fulfilling way of life and you love each other too much to mess it up over money. Accept the fact that the love of your life is also a business partner. Talk about the business fairly often; have meetings and go over the numbers. By working to stay on the same page about your business/money with your partner, you may very well be saving your marriage.
– REENO –
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