June is the unofficial peak of the wedding season. Couples will be saying “I do” and vowing to love each other until death do they part. But one day, as magical as it may be, does not ensure a lasting a marriage, and divorce statistics prove that matrimonial bliss doesn’t last forever. Often, that’s because of money matters.
You can beat the odds. Here are 9 smart strategies for keeping the marriage sizzling, as well as financially sound.
Go beyond pillow talk: Whispering sweet nothings in the middle of the night is wonderful, but less romantic discussions should be part of the relationship, too. You both need to be on the same page. That can’t happen without conversations about finances, as mundane as they may be. “Discuss and determine what is most important to each of you about money,” points out Daniel Morgan, managing director of Independent Financial Planning in Reston, Virginia.
Talk about roles. Who will be the money chief? Both parties should be fully aware of the state of the family’s finances, so there are no nasty surprises.
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Set goals: After talking about your finances, you will need to both set personal financial objectives and goals as a couple. “Talk about your individual goals and agree on joint decisions,” says Rachele Bouchand, director of financial planning at Clark Nuber in Bellevue, Washington. For example, if you plan to have children, will you fund their college education, will they pay some of the costs, or will the costs be shared?
Be mindful of how you merge your money: Will you be combining paychecks into a joint account or individually managing your money and splitting certain bills? Many couples wonder which is the best option. “If one spouse is a spender and the other a saver, than the saver may be the more suitable person to manage the household finances,” says Bellaria Jimenez, managing director of MetLife Premier Client Group in Cranford, NJ.
Many financial advisers recommend each person have their own account in addition to any joint account.
Consider how merging will change your financial situation. For example, “If you’re fortunate enough to maintain a higher minimum balance in a joint bank account with your soon-to-be spouse, explore premium bank accounts. At many banks, such accounts allow customers to reap the benefits of high-end features like paying interest on your balance and reimbursing for out-of-network ATM fees,” says Ryan Bailey, head of retail bank deposits at TD Bank in Cherry Hill, New Jersey.
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Create a budget, and live on it: Maybe you two have student loans to go with the credit card bills, rent or mortgage, food, gas and any number of other expenses. Know what you both owe, how much income you have and what it will take to run your household.
Pay yourselves first: The best thing you both can do is save for retirement as soon as possible, advises Michael Tove, president of the Affordable Insurance Network in Cary, N.C. That means paying into your long-term retirement plans even before you pay out for something like a cable TV or Netflix subscription. And make those monthly retirement contributions as routinely as paying other bills. That may sound downright brutal, but consider the long-term upside: A 25 year-old investing $500 a month, earning 5 percent a year, will have $766,689 at age 65. Waiting 10 years will result in a total savings of $418,363, and waiting 20 years gives $206,873, Tove says.
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Whittle away debt: Be up front with each other about how much you owe your creditors. “Consider sharing your credit score. At least that’ll give you a rough idea of what you’re getting into financially. Several credit card issuers are providing your credit score on your credit card statement now,” says Charles Tran, founder of CreditDonkey.com.
Develop a plan for paying off individual debt, as well as how you will handle joint debt. Determine which bills you will pay off first and build a plan around that, says Jake Loescher, a financial advisor with Savant Capital Management in Rockford, Ill.
Agree on spending limits. “This will limit questions and quarrels about why one of you spent a certain amount of money,” says Andrew Kirlew, founder of FiscallySound.com.
Expect the unexpected: Everybody needs “just in case” money. The unexpected, be it car repairs or medical expenses not covered by insurance, can wreck a bank account quickly. Having an emergency fund will position your family to survive any squeeze. “You don’t want to rely on credit. Have enough money to handle three to six months of living expenses in a high interest earning savings account or money market account,” says Loescher.
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Be astute spenders: Sure it’s fun to eat out, but keep it to a minimum. “Dine in. This is a win, win, win. You spend time together, eat healthier and save a little dough,” says Kevin Pollack, co-founder of Chamberlain Warden, an investment management firm in Bingham Farms, Michigan. And when it comes to cars, for example, buy used, not new — and don’t lease, says Pollack. “You’ll save hundreds of dollars a month.” Plan ahead for big purchases.
Get insurance: Nobody wants to think about his or her partner getting sick or dying prematurely, but it happens. You want to be sure that you have car, life, health, disability and renter’s or homeowner’s insurance. “There is only one thing worse than dying and leaving your spouse alone, and that is leaving your spouse alone and broke or having to worry about selling the house because they can’t afford to keep it,” says Kirlew.
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