Newlyweds? Get Started on the Right Financial Foot!
Financial troubles are a leading cause of divorce in the US1.
Need we say more?
What you do with your money matters.
What you do with your money as a newlywed couple is of the utmost importance.
What are some of the steps that you can take together to ensure that money problems don't become a major issue in your marriage?
Talk it out
Good, honest communication is arguably the most important thing you can have in a marriage. It is important to talk about everything and to be open about issues you are facing. That is only way to work through issues when they come up, and prevent them from becoming big fights in the future.
Money topics are no different. You have to talk about your values around money.
Do you have financial goals? Buying new cars? A House? Vacations?
You need to know what each other wants and values, and from there develop goals to achieve. Money affects other things in your married life as well, like children.
At what point are you financially well off enough to have kids? Or, for those that need extra help in having children, when are you ready financially to seek out that assistance? Even adoption comes with certain costs that need to be planned for.
If you do have children, what are you going to teach them about money and how to handle it?
Work Together
Working together goes hand in hand with good communication. I believe that completely integrating finances together (all joint bank accounts, all bills paid from the same account, everything done together (with a few exceptions).
Money isn't different than everything else in your marriage. You must work as a team. Both sides need to have a full picture of what each other has as far as money, investments, assets, and especially debt. That way you can plan together on how best to achieve your goals.
It has to be about the "we" and "us" and not individual. You are a team in everything that you do. Your money, working together, has a lot more potential than individually or with one person making all of the financial decision alone.
Debt is a BIG issue.
Debt can really lead to the biggest issues surrounding money. If you have a lot of debt, and you don't have a plan to reduce or eliminate it, then the debt can continue to grow to suffocating levels. This leads to even more stress and fights.
Do you have student loans? If so, a plan to get them paid off?
Credit cards get a lot of couples into big trouble. Are you paying off the balance every month? Credit card use is okay, credit card debt is not okay. It may be you need a budget in place in order to ensure that you are not racking up debt in places that you need to.
Avoiding debt may mean putting off car purchases or vacations and at times you have to make those hard decisions together. I know from experience that delaying a home purchase is incredibly difficult, especially in crazy markets where house prices seem like they are skyrocketing.
I personally moved from Berlin, Germany (where home prices were literally increasing at higher rate than anywhere else in the ENTIRE WORLD) to Denver (which is seeing the same pattern), and it was hard waiting and delaying that purchase. However, we just were not ready to buy a home when we moved to either town. Renting is a real strategy that is cheaper in the short term, and a strategic decision that can really make sense for a lot of couples in a lot of circumstances.
Have a Plan
Ben Franklin - of The Office fame - once said, “If you fail to plan, you are planning to fail!”
(Not really Ben Franklin, even if he had Dwight fooled)
One of the best ways to avoid debt, and to ensure that you are on the same page and able to communicate about money, is to have a sold Financial Plan.
A good Financial Planner is going not only help you get a better overall picture of your financial lives, but they are going to help you have discussions and be able to identify goals and values so that you can begin to work together and communicate better. A good planner will initiate conversations and help you to align together financially.
A Financial Plan shows where the money should go in order to achieve the goals that result from these conversations. Having this roadmap allows you really work together and allocate the money work hard for to places that will make it work hard for you. It places you immediately on the same page and shows you the potential value of what you can do together.
Couples who work together and are on the same page financially potentially have a much greater chance of aligning on everything else as well.
What is your new family's plan?
Make Sure You Plan For Your Family's Future!
All written content on this site is for information purposes only. Opinions expressed herein are solely those of Snowcap Financial, unless otherwise specifically cited. Material presented is believed to be from reliable sources and no representations are made by our firm as to other parties’ informational accuracy or completeness. All information or ideas provided should be discussed in detail with an advisor, accountant or legal counsel prior to implementation.
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