Wedding season is underway and hundreds of Hoosier couples are taking the next step toward building their life together. Before they make their way to the altar they spend time evaluating their personalities, values, goals and more to determine if they are compatible. However, money management is one trait that is often overlooked. Questions like “How much debt do you have?” “What’s your investing philosophy?” and “How much do you save each month?” can be difficult questions to ask and even seem out of place. But discovering these answers early on in a relationship – before marriage cements a financial partnership – can prevent stress and arguments after saying “I do.” Even the most compatible couple may find they have vastly different attitudes and experiences with spending and saving habits. Some people are innate savers, investing and living on a budget. Others are quick to spend without prior planning and may drain their personal checking account every month. Assuming your significant other is financially fit can be a recipe for disaster. Whether you’re just beginning to think about marriage or recently tied the knot, don’t shy away from initiating important financial discussions. Go to the table with an open mind and an understanding that, while there are certainly wrong ways to manage money, there is more than one right way. It’s all about compromising and finding what works for you as a couple. Here are some tips and things to consider as you merge your finances:
- Create a budget. Have a plan for your money that you both agree on. Determine how much of your joint income will go toward fixed expenses (i.e. rent, insurance) versus flexible expenses (i.e. groceries, entertainment). Also, consider how much you will set aside to save, donate and/or invest. Revisit your budget often and make adjustments as necessary.
- Be patient. It will take time to adapt to your shared budget and slip ups will happen, especially early on. Learn from those experiences and regularly communicate about how you are doing with sticking to your plan.
- Consider a three-pot system. Some experts recommend each partner maintains his or her own separate account after a portion of their earnings is pooled into a joint account used for bills, living expenses, household purchases, etc. This allows for even financial footing in the relationship and provides some freedom if one partner decides to splurge on an individual purchase.
- Plan ahead for big expenses. Buying a home and having children are two common ventures for married couples and both can have a significant impact on your finances. As a couple, it’s important to carefully consider if you are financially prepared to make these commitments. It can help to talk early on about your long-term goals and create a savings plan so you are not financially overwhelmed when the time comes to buy a home or have children.
- Research financial professionals before using them. Some couples turn to financial planners and/or investment advisers for help negotiating money matters. Before working with a financial professional, make sure they are licensed and registered by calling my office’s Securities Division at 1-800-223-8791 or using the searchable databases online athttp://www.indianainvestmentwatch.com/.
For additional money management tips, and to download a PDF of the “Money Skills for Newlywed Couples” guide, visit http://www.IndianaInvestmentWatch.com. Photo credit Alex Indigo