Marriage and Finance Advice – Mrs Breathe Easy Finance.
You are engaged and now planning the wedding of your dreams. You plan every intricate detail for your special day. After the bride finds her beautiful gown, she then turns her attention to finding something old, new and something blue to wear on her day. However, we neglect to focus on that something green.
YES! That something green is money…also known as Benjamins…Dinero…Pasos
Couples often go into marriage naïve about how much finances actually impact marriages. Clearly, it’s an unromantic, not so sexy topic. It can surely knock even the happiest couples off of cloud nine.
Marriage and finance are so intermingled. Time and time again… research tells us that a top reason for marital disputes and the big ugly D-word, is finances. Although many couples do seek premarital counseling, finances is not made a priority. We merely scratch the surface about finances in premarital counseling.
Younger couples are even less likely to discuss finances because they don’t have any assets and might be working an entry level job. Others take on the money doesn’t matter and love conquers all approach.
To get a better feel about how serious the matter of marriage and finance is, check out Dave Ramsey’s rant. It will get your prepped.
In 2017, Ramsey Solutions conducted a survey which included marriage and finances.
Here were some of the findings:
Money is the number #1 reason for arguments in marriage.
In the last 5 years, 86% of couples were in debt when they got married.
Couples with higher debt argued about money more. Yep! More debt, more problems!
Couples who were in “happy” marriages discussed financial goals more
Here are some steps you can take to start your marriage on a solid financial foundation.
Work together to achieve the best marriage and finance
Table of Contents
1. Review each other’s financial history
There should be full-disclosure in discussing premarital finances. Ideally, couples should seat down pull up there financial histories, and go through all of the details. This isn’t a matter of trust, it’s being practical.
Some people have never looked at their own financial histories and can be surprised themselves at what they see. There can also be errors in your history that both of you need to know about. You do not want to be blind sighted by a blemish in your financial history, when you are in the process of something, like purchasing a house.
If you decide not to review each other’s financial histories, try to still get as much detail as possible. Ask about the existence of any credit or credit card debt. Talk about any outstanding loans. I recommend not settling for vague statements or explanations.
A statement likes “I have a small college loan”, is not full financial disclosure and can leave room for misinterpretation. You want to know, how much the loan is, how is it being dealt with currently and what is the plan to pay if off. A better statement would be “I have 40,000, in student loans; I’m making $500 per month and plan to pay I off in 6 years”. You now have more details and a verbal plan in place to pay it off.
Read how to pay off your student loan here.
Ask about any negative money habits like bankruptcy
2. Don’t be afraid to ask about bankruptcy, especially if this is not your partner’s first marriage!
The more marriages, the more financial baggage.
Being financially tied to someone, who has filed or who is currently dealing with bankruptcy will have many financial implications for you as well. The possibility of owning a home or just about anything that would require a lender within 5-7 years of filing bankruptcy is pretty grim. If you do get a loan despite the bankruptcy, good luck finding a decent interest rate.
If your spouse is paying alimony, child support or any other extraneous financial expense. Realize the impact it will have on both of you financially and decide how to tackle them. Should your spouse pay child support or alimony from their personally income or use the overall household budget?
Read 10 tips on how to get out of debt before considering bankruptcyhere
Divide the task by skills
3. Divvyup the task
Similar to assigning other routine tasks such as taking out the trash. Couples need to decide on financial roles. Who is going to pay the bills and who keep track of the accounts?
These roles can be determined based on many factors. You can base it off of your individual skills set. You might assign more financial responsibility to the partner who is more financial savvy, or more organized. I’m a major procrastinator, so we initially assigned more tasks to my husband
As I have become more financially mature and he has taken on more responsibility at work, I’ve evolved into a more active role in our family finances. The spouse that brings home the most bacon doesn’t necessarily have to fry it. There are plenty of stay at home moms, who do an incredible job at handling the family’s finances.
Read more on how we budget as a family. Lots of juicy backstories to how Mrs Breathe Easy survives her frugal doctor husband
Financial family meeting disguised as a date
4. Have a monthly financial meeting
I’m a fan of monthly family financial meetings and it’s an important strategy to implement from the very beginning. I was hesitant when my husband suggested monthly financial meetings. I thought to myself, why can’t we just talk about our finances at any random time. While that might be true, I have come to realize the effectiveness of monthly meetings. I’m able to mentally prepare and even do some homework before hand.
We start the meetings by reviewing our monthly budget and our net-worth. We then decide what is working for our finances and the things we need to change or improve. These meetings are helpful in setting financial goals. Our monthly meeting is a safe place to discuss money and not feel ambushed.
It is better to do this as a date, so if feels light and less stressful. This is an excuse for a date night. Stay on budget of course.
Assignments
Who will pay bills?
Who will track and monitor accounts and payment?
Who handles the investments?
What is the priority? Paying off debt vs investing?
Be creative and come up with questions.
Work as a team whether you have a joint account or not
5. Know if you want to merge or have separate bank account
Another big decision for new couples, is deciding whether to join finances, keep accounts separate or have a combination of both.
Some new couples believe that joining finances is the ultimate representation of becoming one. Merging accounts can assist new couples in getting on the same financial page. It can make budgeting, paying bills and saving more straightforward.
Other couples may choose to continue having account separate for a number of reasons. Some couples just like the financial independents of keeping money for the most separate and still work towards a common financial goal. This might be practical, if one spouse is dealing with some form of financial impediment such as bankruptcy or having wages garnished.
I think it’s popular for many new couples to maintain a personal account and open a joint account. This way they get to have their cake and eat it too! They maintain some shred of independence, while still joining financial forces.
This is the current strategy we chose, and it is working well so far. We deposit all checks and pay into the joint account, we then distribute from there. We allow for discretionary allowances, about $400 each if needed, and it can be transferred to personal account.
Does your partner speak financial gibberish?
6. What Financial Language does your spouse speak?
In the words of Joe Biden, “Don’t tell me what you value, show me your budget.”
Get a glance of what your future spouse financial budget looks like. This will give you a window into how your partner handles money, feel about money and values money. Speaking different financial languages does not disqualify you from marriage. It just makes it clear that you have your work cut out for you.
Here are the different scenarios possible.
Minimalist vs Minimalist:
Great! You both speak the same financial language. Just don’t assume that because your spouse is a minimalist, everything will just fall in line financially. Although both spouses might save more and spend less, it is likely that their financial priorities of spending and saving will be different. The minimalist couple might be in an optimal position to succeed at financial goals but there are still plenty of kinks to work out before saying “I DO”.
Minimalist vs Maximalist:
This is the couple who are on opposite ends of the financial spectrum. They are speaking two different financial languages. The different financial outlooks can make this couple vulnerable to financial quarrels. At this stage in your relationship you most likely know if your partner is a minimalist or maximalist. Don’t be dis mayed! There is a reason for the saying opposites attract.
The minimalist and maximalist couple can almost serve as a system of checks and balances for one another. They might never speak the same financial language and they don’t have to. What is key here is the ability to understand one another, rather than having to fluently speak the same language. The minimalist and maximalist should implement safety nets to prevent reckless spending such as needing each other’s approval to spend over a certain amount of money.
For example, “We will have a discussion before any purchases of $500 dollars or more.” This couple could also benefit from the structure of the envelope system (link to why you should try the modified envelope system at least once in your lifetime)early on in their marriage.
Maximalist vs Maximalist:
This couple perhaps will face an uphill battle figuring out their finances. They might find solace in the fact that if both are spending, then no one is complaining. I am not an avid supporter of a financial advisor but this couple can use one as a third party for assistance with financial goal and planning. This couple can also make small concessions, without extreme spending. If having Starbucks coffee is your wife’s thing, let her have it. If your husband needs a specific sports package, let him be. Redistribute your budget to allow for some accommodations.
Whats next for your partner financially
7. Know your partners future financial plans
Once you have reviewed financial histories, you can move ahead with financial planning. What is his/her future financial plans? Is it to be financially independent or to live the YOLO life?
Planning how to manage monetary wedding gifts, can break the ice and spark the conversation of planning your financial futures together. Some couples use it for their honeymoon, as down payment for a new home or to pay off debt.
Your partner’s choice will also give you an insight into their financial ideology.
Remember, both marriage and finance require patience, understanding and compromise.
Other supplemental readings
Financial planning pyramid – The ultimate guide to put your financial house in order
Forget prenup, use these wealth planning strategies instead
Limitations to budgeting and how to fix it. Is budgeting right for you?
Our most viral post. See for yourself.
Dave Ramsey baby steps is outdated, try these 12 toddler steps instead
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Adebayo
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I am a pulmonary and critical care doctor by day and personal finance blogger/debt slaying ninja by night.
After paying off close to $300,000 in student loan debt in less than 6 months into my real job, I started on a mission to help others achieve the same. There is no magic to this than to strap up and get it done. Some of the ways we achieved this include side hustle, budgeting, great negotiation skills, and geographical arbitrage.
When I was growing up, common knowledge in Nigeria is that there is one thing you cannot trust anyone else with, and you guessed it – your money.
Being frugal came easily to me based on my background. However, the concept of building wealth did not solidify in my mind until when I finished medical school. I wish I knew what I know now when I was 14. Still, I don’t know enough and I am constantly learning to improve my knowledge.
My goal is to reduce financial illiteracy among young professionals. I am catering to the beginners – babies and toddlers in financial literacy.
