We first published this story last year, for a special bridal feature that one of our company partners was sponsoring. We got great feedback on the story, so we’re offering it up again – seems timely, since we just had such a good time at the WBNQ Bridal Show!
Couples and Money: Truth or Friction?
The prospect of getting married is so exciting! You’re in love and your whole world now revolves around the one person you’ve decided to spend the rest of your life with. It’s a wonderful feeling, full of promise and possibility and plans for your future together.
It’s wonderful to enjoy this time while you can see your whole future as a never-ending parade of love and happiness, but don’t close your eyes to the day-to-day challenges that will surely come.
One of the biggest sources of conflict in a relationship – perhaps the biggest source – is about money. Be sure you have an open and honest discussion about how you intend to handle financial matters long before you actually tie the knot. Some things to consider:
Should we have separate accounts or put all our money together?
Only you can decide what will work best for you. Whatever you decide, be sure that you both have a good idea about how much your spouse is earning, spending, borrowing and investing. There are simple things that any couple can do to figure out what will work best.
First, talk about your budget. If the word makes you cringe, start by calling it a spending plan, and agree to look at it as a flexible, working document – subject to periodic review as your needs and circumstances change. A budget really is just a plan, so once you define your goals, the plan simply outlines the steps you’re going to take to achieve them.
How do you start? Track all of your expenses for a month. You should each keep track of all your expenditures for thirty days, then categorize them and add it all up. Be honest about your spending, and don’t try to hide anything – it’s kind of like lying to your doctor. If you don’t recognize the things that are wrong, you’ll never be able to fix them.
Once you know how much money you have and where it’s going, set some goals. Do you want to save up a down payment on a house and move in two years from now? Determine how much money you’ll need for the down payment, divide it by 24 months, and you have your first goal. Be sure to maximize your contributions to retirement and 401K plans. Contribute at least enough to earn your company’s match.
Perhaps you agree to merge the money for your household expenses, but also to keep your own individual checking accounts that you’re allowed to spend from with no questions asked. Just be sure you both agree on what constitutes a household expense and what constitutes personal spending.
Set a threshold for “big” expenses that you need to agree on – say, you both have to agree to buy something if it costs more than $200.
Don’t criticize each other over money matters in public. Keep financial discussions private.
Where should we keep our money?
In a credit union? Credit Unions are not-for-profit, member-owned cooperatives, governed by a volunteer board of directors who are accountable to the credit union’s membership. Generally speaking, credit unions offer every product and service you’ll need to run your household, plus tons of convenient services like internet banking, online bill pay and apps that allow you to do your banking from your smart phone. Credit unions tend to be smaller than banks and offer more time, attention and personal service. At a credit union, fees and interest rates on loans are usually lower than at other institutions and dividend rates on your deposits are usually higher. Be sure you understand the terms, conditions, restrictions and fees associated with every account you open.
In a bank? Banks are for-profit corporations, governed by a paid board of directors who are accountable to their stockholders. Generally speaking, banks offer the same products, services and convenience features as a credit union. Be sure you understand the terms, conditions, restrictions and fees associated with every account you open.
Banks and credit unions are both required to have either a federal or state charter, and in either case, your deposits are insured up to $250,000 and backed by the full faith and credit of the government of the United States.
Naturally, there are lots of books about the best ways to manage your money. Here are a few recommendations: