Debt, Marriage, Newlyweds, Planning, Saving, Spending
Picture this: You’re standing in the kitchen with your partner, avoiding eye contact while a silent and slow tension builds in the air. The mail sits opened on the kitchen table between you. It’s staring at you both, testing you, but neither one of you wants to be the first to acknowledge it. Passively, one of you succumbs to the discomfort and picks up the credit card bill that is sitting on the top of the pile. And it begins…. What could have been a perfectly civil conversation begins with a gasp or growl, followed by a borage of questions and attacks.
“How is our credit card bill so high again?” “Why didn’t you tell me you were going to charge that?” “Where do you think we’re going to get the money to pay for this?” “You promised you were going to cut back going out to lunch this month.”
What comes next is a series of defensive maneuvers and blame-shifting that eventually leads to some pretty impressive shouting or, for those of you who didn’t grow up in a loud Italian family like me, piercing angry eye stare-downs that basically conveys the same message: I’m really mad about the finances and I’m taking it out on you right now. What if I told you that money conversations didn’t have to go this way? What if there was a way to stop having the same money arguments over and over again? There is. Money can fuel some pretty passionate responses and reactions, which is why the first step toward avoiding money arguments is to stop being reactive and start planning for proactive money conversations instead. Here’s how.
Get on the same page
Schedule time for both of you to talk uninterrupted about the household finances. I recommend creating an agenda together on what you want to cover and accomplish during your planned talk. This will help you keep your conversation focused and productive.
- Review the state of the finances so both of you know exactly what your money situation is. Is debt an issue? Not enough savings? Don’t feel like you’re on track to meet your goals? Having both of you aware and involved will help keep you aligned.
- Speaking of goals, you should have specific ones for your money. How much are you trying to save and for what purpose? Are you buying a new home, starting a business, growing your family or simply trying to build your rainy day fund? Target specific amounts you’d like to stash away and assign a time period for building up the savings for each goal.
- Discuss roles and responsibilities for managing the finances, such as paying bills, saving, monitoring, etc.
- Share what you think is working and what could be working better (or really isn’t working at all).
- Agree how you’ll communicate and work together going forward (perhaps preparing ahead of time before coming to meetings / money talks.
You may have this particular conversation a few times before you’re finally on the same page. The real point of this conversation is to lay it all out on the table, explore the finances together and hash out anything that needs to be addressed so that it doesn’t continue to cause arguments in the future.
Schedule regular money talks
From here, keep communication open by continuing to schedule time to talk about money. Scheduling is key, because it isn’t a reaction to someone or something. Instead, it’s a commitment you’re both making to stay present with the finances. Maintaining a monthly budget together is a great way to keep each other accountable and engaged in the process. Proactively planning on how much you’ll save, what you need to cover your regular expenses, and allocating a certain amount of funds for undefined discretionary purchases helps to prevent any surprises on your credit card statement and anyone from being caught off guard.
Don’t point fingers
Finger pointing won’t get you anywhere when it comes to actually making progress with your money. In my experience, it may be better to avoid “you” comments altogether and opt for the “we,” because your money story includes both of you after all. So rather than saying, “You always spend too much going out to eat during the week.” A better way to address this particular issue (during your scheduled regular money talks) is to say, “We continue to spend more than we allocated on going out to eat. Are there any ways we can limit or better track these expenses? Or should we cut back on another area instead so it balances out?” Remember, it’s about resolving the finances together, not attacking one another.
Kind, positive affirmations go a long way, especially after a history of arguments and criticisms. Be supportive of each other and give praise when praise is do. Acknowledge the other person for their contributions to household finances. Thank your wife for paying the bills. Praise your husband when he opts to pay more towards the car payment instead of using the discretionary money on himself. Help make each other feel good and appreciated when it comes to money. It’s not easy and you both deserve affirmations for the effort, intention and commitment you’re putting in to make it a more positive experience for both of you. When you make a choice as a couple to start communicating about money, you’re really choosing to work through and resolve the issues that activated your arguments in the first place. If you’re just starting out on your money journey together, the Newlywed Money Bootcamp may be a great place to begin your financial future.
Budgeting, Debt, Education, Financial Planning, Investing, Marriage, Newlyweds
Just got married? Congratulations! Now that the honeymoon is over, it’s time to think about how you’ll manage your finances as a new couple. But getting on the same financial page isn’t always easy, especially considering most newlyweds don’t stop to think about money amidst all the other exciting changes taking place. Here’s the good news: setting up for financial success with your partner doesn’t need to be stressful, confusing, or frustrating when you’re part of the Newlywed Money Bootcamp. This comprehensive course is made for couples who want to gain clarity on their financial situation and work together as a team to achieve financial success. And you don’t need to newly married to benefit! This course is for any couple that wants to change the conversation around money in their relationship in a positive way. Need further proof? Here are 10 reasons why the Newlywed Money Bootcamp is for you if:
1. You Struggle to Align Your Financial Philosophies Is one of you a spender, while the other is a saver? If your other half has different spending habits than you do, then this course will help align your money management habits. You’ll learn how to bust bad spending habits and how to spend meaningfully in a way that reflects your values. Say goodbye to little disagreements over money and hello to a stress-free spending plan.
2. You Need Help Establishing Joint Financial Goals Are both of you on the same page about what you hope to accomplish with your money? Does one of you want to save for a house, while the other wants to pay off debt? In this course, you’ll learn how to set S.M.A.R.T. goals together. When you’re both focused on the same goals and working together, you’ll get to where you want to be quicker.
3. Creating a Household Budget is Difficult Have you and your spouse created a joint budget together? It can be difficult to agree on a household budget your first time around. The Newlywed Money Bootcamp will walk you through on how to create one that fits with your lifestyle so you don’t feel deprived.
4. You’re Not Sure Who Should Handle the Finances You’ll need to establish who will be the primary financial executive in your house – or at least get specific on who will handle certain tasks. Which one of you will manage your portfolio, track your spending, or calculate your net worth? Understanding your responsibilities and different roles will help you work together towards your biggest financial needs and goals.
5. You Need to Create a Debt Payoff Plan If either of you have debt, you need to decide on how to pay it off. This can be somewhat tricky if only one of you had debt prior to marriage. Some couples choose to pay off their own debts separately, while others choose to take on debt as a team. The course will help you create a plan that works for you so you can tackle debt once and for all.
6. You’re Confused on Where to Start with Taxes, Benefits, and Insurance You both need to make sure that you have the appropriate coverage now that you’re married. Navigating the ins and outs of taxes, benefits, insurance plans, and more can be extremely confusing and frustrating for couples. With this bootcamp, you’ll learn how to determine the right amount of life insurance for your new family, how to create an estate plan, and how to deal with taxes now that your legal status has changed.
7. You Need Help Talking About Money Communication is critical to success. You and your spouse need to be able to talk about your financial situation, but many couples find it hard to develop that habit if money was a previously taboo subject. If you need help broaching the topic, this course will give you tips on how to have monthly money dates where you touch base on how your finances are doing.
8. You’re Trying to Decide Whether or Not to Merge Accounts Do you know if you want to merge finances with your spouse? This isn’t a decision you should take lightly, and there’s no reason to rush it. By going through the Newlywed Money Bootcamp together, you’ll come out with a better understanding of what you want your financial future to look like – and that will make this decision easier.
9. You Don’t Know Where to Start with Investing In this course, you’ll get my best advice for newlyweds on how to invest your money in a way that will work for you. Investing can be overwhelming and scary to think about, but it’s an important part of your financial plan if you hope to grow wealth for retirement. We’ll cover different ways you can invest while keeping your goals for the future in mind.
10. You Want Your Money to be a Source of Empowerment, Not Stress You might have heard that money is the number one reason for divorce. That’s sad to think about, especially when financial issues can be resolved ahead of time. Going through this course with your spouse will enlighten you and save you years of stressing out about managing your finances together. The earlier you start, the stronger your foundation for trust and teamwork will be. Getting on the right track with your finances as soon as possible is critical. Your relationship and your money will thank you for it later. After working through the Newlywed Money Bootcamp, you’ll have a better understanding of both your spouse and your financial situation together.
Debt, Marriage, Newlyweds
Recently engaged or married? After all the excitement and honeymoon bliss has faded, you might be left wondering how to manage your finances as a couple. Concerns over how to work together to deal with your newly joined lives might be heightened if you have more than just bills to pay and savings to build. When it comes to newlyweds and money, figuring out how to deal with debt when one or both individuals brings it into the marriage is an important step.
Joint or Separate Finances?
The first thing you need to figure out with your other half is whether or not to combine your finances. If you already have a working plan in place, great! Skip ahead to the next piece of advice. Ultimately, this is a personal decision, and one that every couple has to make for themselves.
What’s Mine Is Yours…Wait, Does That Apply to Debt?
You now need to decide exactly how you’ll pay off your debts. Again, every couple has to make this decision for themselves. It could depend on who has debt and how much. If both of you brought debt to the table, you can either tackle all the debts together or focus on it individually. If one of you holds debt but the other doesn’t, this may be a topic to discuss before the wedding. You might choose to support your future spouse and help them pay their debt – or you may agree that the individual with the debt holds the responsibility to repay it. Whether you work together financially or choose to keep money separate, you should always be supportive and encouraging of each other. “Helping out” isn’t limited to providing money. You can share ideas and knowledge to create a better repayment plan. One of you can research to find programs and tools to help make money management easier. Or you can even do a few more chores around the house when your spouse is out doing some part-time work on the side to earn more money to repay that debt even faster. Remember, this is a partnership and everyone can contribute – even if those contributions don’t look exactly the same.
Communication Is Key
When deciding how you’ll deal with debt, keep in mind that no one should feel resentful or neglected. It’s important to set up regular money dates to go over your finances together and allow both individuals to voice concerns as well as to celebrate little victories. You should discuss money with each other to ensure you’re on the same financial page. To start, set up your date to discuss the overall state of your finances. You’ll also want to create a plan on how to pay down your debt. If you need help getting started, use these ideas to get your first money date going. You can:
- Discuss the nitty gritty of your debts (and everything relating to them: interest rates, minimum payments, balances remaining), bank balances, and investments.
- Track your spending together. Even if you have separate bank accounts, you should both track your individual and joint expenses. If you’ve never done this before, it might help to backtrack a bit and reference prior statements to see where your money has been going.
- Create a budget, with input from both parties. This will help keep your spending on track, possibly allowing for extra payments toward debt.
- Mention and discuss the financial goals you both have (buying a home, establishing an emergency fund, saving for a family).
- Establish a plan to reach your goals – including paying off your debt. List out action steps that you’ll take to achieve financial success. This might include boosting your income (by picking up a side gig, working overtime, or earning a raise) and cutting expenses (by eliminating unnecessary costs, living beneath your means, and looking for frugal alternatives to expensive purchases).
After this initial meeting, make sure you check in with each other regularly to see what kind of progress you’re making. That might mean once per week or once per month – depending on what your “team” feels comfortable with. It’s okay if you don’t stick to an original goal or if your priorities shift, but you must communicate that with your partner. Regular money dates help create a good time to share all this and stay on the same page.
Prioritize Your Debt
If you have multiple debts, they may feel completely overwhelming. Before you panic, know that you and your partner can do this! And there are a few strategies you can use to help make it easier. The first strategy is known as the avalanche method. This method directs you to prioritize your debts by their interest rates. You work to pay off the debt with the highest interest rate first (while still paying the minimums on your other debts). Mathmatically, this makes the most sense. The interest rates on loans and credit cards cost you more the longer you hold on to them, and of course higher rates cost you the most. But some people find it really intimidating to try and tackle their biggest, baddest debt as the first step toward debt freedom. If you prefer to start small, you can try a different strategy that comes at the problem from the other end. This strategy, known as the snowball method, involves prioritizing debts in order of the amount of money you owe. You start with the debt with the smallest balance and work your way up, regardless of interest rate. This is helpful for those that feel discouraged by the amount of debt they’re in, as it should give them a quick win. However, it may not be the most financially efficient way to deal with all of your debt. You may end up paying more in the long run if you let high interest rate debts sit on the back burner while repaying other balances. What matters is that you’re making progress with your debt and moving in the right direction. It’s best to just start. If there’s one debt really weighing on you emotionally, tackle that first!
Don’t Give Up
Lastly, focus on the fact you both want to get out of debt. While things might get tough, remember that you’re both working toward the same thing. Be supportive of each other, even when mistakes happen. Be thankful you have someone to share the journey with. When all is said and done, you’ll have a stronger relationship.
Need Some Extra Guidance?
Check out the Newlywed Money Bootcamp to see if it’s right for you!
Investing, Marriage, Newlyweds, Retirement, Saving
Recently married? Congratulations! Now that you’ve officially pulled off the feat of planning and preparation that is required of a modern wedding and you can call yourselves newlyweds, it’s time to start thinking about a different kind of planning. That’s financial planning, and it’s crucial to do in order to meet all those big goals you and your new spouse have for your lives together. Dealing with your finances as newlyweds can seem intimidating. But financially-savvy couples know that the most important thing you can do is to just get started. Taking some simple actions now can pay big dividends in the future. With that in mind, consider these tips on investing so your happily ever after can include financial success.
Start with the Basics
If you don’t know anything about finances or investing, recognize that you need to increase your financial literacy. Ask for help from a professional, start reading up on personal finance books, and look into educational courses on money and investments that you can take together. You don’t need to be financial experts before you start investing, but you do need to understand the fundamentals so you aren’t throwing your money around blindly. Start by reading this post on Basic Investing Terms You Should Know along with the follow up post.
Claim Free Money
The best place to start investing is with employer-sponsored retirement accounts. Retirement accounts like 401(k)s often come with a company match. And that’s free money on the table for you and your spouse. Contributing at least enough to secure the match will require you to contribute a certain amount of your base pay up to a pre-set limit and the company will match your contribution with funds of their own (i.e. your employer will match 50% of your personal contribution to your 401(k) up to 6% of your salary). This is an added perk that comes along with your salary and can help to put some extra dollars towards your retirement.
Max Out Accounts on Your Own
Once you’ve taken advantage of any employer match on your 401(k), it’s time to look at an IRA. An IRA, or individual retirement account, is an account you can open and contribute to independently of any employer. Aim to max out either a Roth IRA or traditional IRA; the maximum for 2014 on both these accounts is $5,500. And if you’re self-employed look into the retirement plans available for entrepreneurs and consider going with a SEP IRA . You can contribute 20% of your earnings to a SEP IRA if you’re a sole proprietorship. This can offer some serious self-employment tax savings, as SEPs are tax-deferred (meaning you’re not taxed until you withdraw your money).
Take Advantage of Two Salaries to Boost Your Contributions
As newlyweds, you just doubled your household income if both you and your spouse bring home a paycheck. Instead of giving in to lifestyle inflation and increasing your spending as you increase your income, establish a budget that uses just one partner’s salary for expenses. In other words, live off one salary – and try to bank the second salary to boost your investment contributions.
The couple that learns about money together stays together! Sure, it sounds a little silly, but communicating and constantly adding to your financial knowledge as a couple goes a long way. Disagreements and misunderstandings about money lead to serious marital stress. Remember that you and your new spouse are a team and you’re working together toward what you want to achieve in life. It’s up to you to secure an ideal, secure retirement for the two of you. No one else is going to take care of your financial needs in the future, so it’s important that you plan ahead and start saving now. Thanks to the power of compound interest, your 20s and 30s are your prime savings years. Don’t believe me? Check out the example below: If you start saving $200 / month from age 25 to age 65, assuming you earn 7% a year, you’ll have $524,962 at age 65. If you delay and start saving $200 / month from age 35 to age 65, assuming you earn 7% a year, you’ll have $243,995 at age 65. That’s a $280,000 difference! Even if you can’t afford to put away too much for the future right away, remember that every little bit helps! Again, the most important thing is that you just get started as soon as possible if you want to reach your idea of financial success in this life you’re building together.
“Should we merge bank accounts or keep them separate?”
This is one of the most frequently asked questions by couples and it’s one I love answering because it helps clients to consider their individual circumstances and make the choice that they feel is best for them. The short answer is, “it depends.” While combining accounts can make dealing with finances more simplistic, it could also result in one person “turning over” full money responsibilities to their partner and no longer engaging in the family’s financial planning. Keeping separate accounts can make it more complicated to track spending activities and bill payments, but could also be a great way for two financially independent people who are coming together to still feel in control of their pocket book. So, what’s a couple to do? Consider the below for each option and have a candid conversation around what you each feel is the best route for your relationship.
The Case for Combining:
- Joint accounts allow for full disclosure. You’re able to see what both you and your partner are spending and can check-in with each other along the way.
- It’s easy to manage. Paychecks are deposited to one place. Bill payments, groceries, dining out, and all other monthly expenses come from that same place. Who pays for what doesn’t become an issue. Sounds easy enough.
- Accountability. While bills will get paid and goals funded whether accounts are merged or kept separate, when operating with a joint account, spending habits are revealed and your spouse may turn into your accountability partner in reaching joint goals and helping you kick habits that may be detrimental to your financial success.
Personally, my hubby and I merged finances, but have separate credit cards on which we give ourselves a set amount every 2 weeks to spend as we please. We’ve found that this keeps us on track for our bills and goals, and allows us the freedom and flexibility to spend as we’d like within our limits.
The Case for Keeping Things Separate:
- When one spouse makes more than the other, having separate accounts and dividing up the bill payments accordingly can help each to feel like they are contributing, but not carrying the full weight of the payments due.
- When either spouse is bringing debt into the marriage, it may make sense to keep things separate until debt is paid off. This will allow the spouse with the debt to work on spending and money management skills and ensure healthy habits are formed before combining.
- You put aside what is needed for bills and goals and whatever is left is yours to do with. This is ideal when one partner spends more or less than the other. Spending habits, from frequency to size of expenditures, can cause tension when they’re differing.
Keep in mind that there are many options and ways to get creative under the “separate” umbrella. You can choose to keep all items separate and divvy up joint bills for payment, or you can maintain your separate accounts and open a joint account meant for paying household bills out of. You can decide to go 50/50 when paying bills or contribute on a percentage basis based upon the amount of income you and your partner each bring in. Ultimately, you’ll need to have a conversation around what is best for you. If you need advice on how other couples are making separate accounts work, check out this article which shares one couple’s story.
Commitment & Communication
Either path you take requires you to set expectations and make a commitment to communicate and stay involved. If you’re merging finances, determine how you’ll manage the accounts and spending. If you’re keeping things separate, assign how and who will pay which bills and determine amounts to allocate towards joint goal funding. Remember, separate accounts doesn’t mean separate goals and it’s not an excuse to keep financial secrets. Set a schedule for money dates and check-ins and be sure to evaluate your strategies as your situation changes. Like what you read? Sign up for the Workable Wealth community for more tips and resources and receive 9 Steps to Workable Wealth, a free guide to help you kick start your financial journey.