Money Matters 15 Tips for young married couples

because religion isn't the only hot-button issue

My last Pure Sex, Pure Love column bemoaned the craziness of the Bridal Registry. Instead of wasting hours, days, even months, learning about thread count and why you need a hostess set of silver, I argued that there are more important discussions brides and grooms should have as they look forward to making a life together.

While this isn’t an earth-shattering argument, you’d be amazed by how many couples would prefer to debate over throw pillows rather than talk about the big-and potentially contentious issues: How many children would you like to have? How will faith be integrated into your family life? What are each spouse’s future goals and dreams? And, of course, finances.

Hot Button #2

Religion and money are hot-button issues for many couples. I’ve written a lot about faith and relationships in previous columns, and will continue to do so: A shared faith is a strong cornerstone for a healthy relationship. A shared financial vision is also crucial for a practical life-partnership. Those pesky questions about balancing checkbooks, paying off credit card debt and what’s allowed as a “discretionary purchases” can make daily life, a bit, well, challenging, regardless of your relationship with God.

And when I brought up the topic in our recent survey, BustedHalo readers had a lot to say. Even though this wasn’t a religious focus for a questionnaire, it resonated with readers, and I enjoyed reading your lengthy responses: 50% of respondents said they had fought with their significant other or spouse about money matters—and you told me what the biggest issues are in your relationship.

The Young and The Stressful

This snapshot data is in keeping with a recent (and nationally representative) Redbook and SmartMoney magazine survey of more than 1,000 men and women between the ages of 18 and 50, all married or part of a committed relationship. In addition to cataloguing disputes over money, the survey found that most men and women (58 and 68 percent, respectively) said that both spouses have an equal say in financial decision-making.

Today’s young couples are sharing the responsibility for finances—but bickering is common because there isn’t a lot of focus on talking about taboo money issues before marriage. Jennifer, 31, writes that when she and her husband volunteered to lead their church’s marriage prep program, she was amazed by how stressful the finances turned out to be. “The couples were forced to come up with a budget and an amazing number of couples have never even told each other how much money they make.”

So forget china patterns, let’s talk about spending, savings and how to grow a 401k.

Here are some useful tips…

(and links to getting more information)

  1. Be open and honest—and talk about your finances now!
    Krista, 25, writes that the way she and her husband handled finances when they were dating and how they managed their joint money after the said their vows was very different. “It’s so important to know what you’re getting into, where your financial similarities and differences are, before you’re married!” she warns.
  2. Talk about money What’s his saving and spending philosophy compared to yours? Opposites may attract, but different spending styles can cause lots of friction and leave you holding debts. Once you’re married, your credit rating it tied to his.
    —From Ernst & Young’s Financial Planning for Women
  3. Confide in your partner Keeping financial problems to yourself is destructive to the openness and stability of your relationship. Discuss your worries with your mate and ask her for practical suggestions and support.
    —From “Love & Money: 25 Financial Tips for Couples”
  4. Go ahead, show your financial warts! And start with your credit report. Everyone has baggage when it comes to their finances. It could be that pesky old credit card debt or your student loans. After all, these problems will be a burden shared by both of you. While you’re at it, share information on your spending habits and any other financial commitments you may have made to others in the past.
  5. Questions to ask about your fiancés financial background: How much money does he earn? What debts does he owe? What investments does he have? Any business ventures or real estate holdings? Has he ever been bankrupt? Is he responsible for alimony or child support payments. The answers to these basic questions should give you some sense of your intended’s financial stability.
    —From Ernst & Young’s Financial Planning for Women

How are you going to spend?
“Couples should have a plan for savings, of course, but also a plan for REAL spending,” writes Lindsay, 20. “How many times a month can the pair go out for entertainment events? To dinner? Out with friends? How much shopping is too much?” And adds Matt, 27, couples might consider talking about a maximum amount that each can spend on one item before it becomes a joint decision.

  1. Create a workable structure for your financial lives Who will be responsible for paying bills, filing invoices, balancing the checkbook, and researching large purchases? Establish a division of labor that suits your talents and needs.
    —From “Love & Money: 25 Financial Tips for Couples”
  2. Set up a spending plan Some couples pool their money into one account. Others use “yours”, “mine,” and “ours” accounts. Each system has its advantages and disadvantages. The one you choose should match your personal attitudes and needs.
    —From Ernst & Young’s Financial Planning for Women
  3. Keep at least two accounts It may be a good idea to have a pot of money shared between the two of you to be used for paying the household bills. And each spouse should be able to take over the joint account. This way one person isn’t stuck paying the bills all the time. And of course, you may want to keep some discretionary cash on the side. This way you’ll both share responsibility for the daily expenses, while also keeping a budget for things you enjoy. At the end of the day we could all use a bit of autonomy.

How are you going to save ?
“Money is a tool, but it’s about deeper issues,” writes Jennifer. “One person craves stability, and therefore wants to save for a house and retirement, while another person craves adventure, and wants to use the money they make to travel.” Couples need to discuss these issues – and how to accomplish their goals.

  1. Set up a saving plan Determine your joint financial goals. If necessary, pay yourself first with automatic monthly withdrawals from your checking account to a savings or investment account.
    —From Ernst & Young’s Financial Planning for Women
  2. Celebrate your differences If one of you is a saver and the other a spender, create a budget that allows for both. If your partner is a bargain-hunter, put him in charge of the spending part of the budget, while you invest the savings.
    —From “Love & Money: 25 Financial Tips for Couples”
  3. Be 401(k) savvy Your 401(k) plans are yours. But make sure you know the strengths and weaknesses of each of your retirement plans so you can balance out each others investments. Plans may have different matching contributions, and investment options. It’s likely that one partner is more conservative and the other is more aggressive, but the takeaway is that the whole retirement pot is allocated properly.

What are your priorities for the future…
are the necessary documents in order?

Many young couples come into marriage with debt – college loans, credit card debt, you name it. Avery, 31, said it’s been important in her marriage to discuss exactly what kind of debt each has and a specific plan for paying it off. Johanna, 23, said she and her husband are talking about how to consolidate debt and how their financial commitments will impact both of them in the future. Here are some more good bits of advice:

  1. Rank your financial priorities Where your individual goals coincide, make a list of the steps it will take to accomplish those goals. Where they collide, figure out which you can live without and how to combine the rest with your partner’s plans.
    —From “Love & Money: 25 Financial Tips for Couples”
  2. Review all documents If you don’t have any children, it’s likely that you named your parents, siblings, and/or other relatives as the beneficiaries of your life insurance policies and retirement plan assets. You’ll probably want to make your husband the beneficiary as soon as you tie the knot. Make sure he does the same, if agreed.
    —From Ernst & Young’s Financial Planning for Women
  3. Review health care plans One spouse’s health insurance may be preferable over the other’s.
    —From Ernst & Young’s Financial Planning for Women
  4. Beware of joint filing risks Of course there are a lot of benefits to filing jointly – tax breaks for one. But if you have concerns about your spouse’s credit history, you may want to take some precautions. Once you file jointly, you’re just as liable. For example, if your partner is called upon to increase alimony payments or child support and is dragged into court, your own tax return will be scrutinized. If your husband or wife underreports income, you’ll be jointly liable and that means all the penalty and taxes will fall on your shoulders. You can get relief from joint liability if you apply for innocent spouse status to the IRS, but it can be very hard to prove according to Amanda Walker of Consumer Reports. In fact, the IRS grants less than 3 in 10 requests for innocent spouse.