Marriage and Money
Making It All Work
When talking about marriage and money I am venturing into a very difficult subject. A subject that creates a lot of sparks. Marriage can be difficult as it is when two people come together and join their previously individual lives. However, when we tack on money now we have some fighting words. In this Hub I want to discuss some major contentions that occur in marriage when it comes to money and how they can be avoided.
If you were to look up statistics regarding marital bliss and money you would find that a high percentage of divorces occur over money and that couples argue twice as much about money then they do sex. Money for many people are fighting words, and when it comes to marriage this is not good. So let's see if we can avoid some finding and focus on the loving.
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Debt and Our Relationship
Unfortunately many Americans have a lot of debt. This is true whether we are married or single. What happens most of the time is when two people come together at least one and probably both bring debt into the relationship. Too often, the potential spouse doesn't know about the debt (are at least the extent of the debt) until after they've tied the knot.
Obviously this is an area where many sparks can fly. The only thing worse then having a lot of debt to pay off is having to pay off another person's debt. When getting married the two individuals should sit down and discuss where they are financially. I know this is the most romantic conversation that two in love individuals can have, but clearing the air prior to is a lot better then the surprise that can take place after the fact.
Do you remember hearing the old saying that opposites attract? Well that is true and what happens from a financial standpoint is that many times a debt free individual and an in debt individual will be attracted to one another. Another scenario is an proportionate amount of debt between the two individuals. One may have $5,000 in debt while the other has $15,000 in debt.
A plan needs to be established before you get married on how you are going to handle the debt. Are we going to pay it off together? Do we need to get it paid off before we get married? What is our game plan?
The benefit in talking honestly about our debt prior to marriage is that it will help prevent future animosity. It is very easy for the person who has no or little debt to think that they came into the marriage stronger and contributing more to a lasting prosperous marriage especially if financial problems are encountered early on.
On the other hand if quality communication about debt is achieved prior to the marriage and a game plan of how we are going to handle is established then we are both working on the same page toward the same goal. If someone in the pressure of the moment blurts out, "If you hadn't had so much debt then we would have this problems" the spouse can easily bring the conversation back to the point of agreement and possibly avoid a nasty bout.
Debt and Personality
Our personalities play a big part in the amount of debt that we have. If someone is heavy in debt prior to marriage they will typically lean toward having a lot of debt after they are married. It's a personality trait not a financial issue.
As I mentioned above opposites attract. It is not uncommon for a spender and a saver to get married or an investor and someone who wants safety, safety, and more safety. This is again something that needs to be talked about prior to getting married and a game plan originated. I personally know a man who have the ability to make money through investments and different business transactions, but his wife is so frightened of not have security for the future that he can't do anything. She wants the money sitting in the bank even though they may never need to use it. It has been a point of frustration between the two over the years. I've met others who were very good in managing their money while their spouse wanted to spend and enjoy every dime that came through the doors.
Understanding our personalities will go a long way in preventing a lot of problems for both parties. Again, talking about this prior to marriage and setting up a game plan is key in preventing major disagreements down the road.
Let's say we have a person who is an investor and a person who wants security get married. How do we allow the one make the investments they want to make while not jeopardizing the security of the other? The answer is very simply, have a plan. Through talking we may find out that if we have six months of reserves in a savings account will create security for the one then maybe we focus on getting that first and then after we have the savings set aside we build an investment account. Maybe after we look at our budget we are going to have $2,000 a month left over and we decide to put $1,000 aside for our financial security while setting $1,000 aside to make investments.
Both can easily be achieved if we know the facts and understand the personality of each individual.
Avoid Power Play
Power plays can come in a multitude of ways. If both couples work their may be a large difference between the two incomes. The person with the larger income may think that they should have more say then the person with the smaller income. In the debt arena as discussed above one may have a lot of debt while the other has little or no debt. The person who came into the marriage with no debt may feel that they should have final say so.
Sometimes an individual will marry someone who comes from a family with money. It is easy for the person whose family has money to think they should have a control in how the money is handled because their side of the family represents their personal wealth. If only one spouse works then the working spouse can easily view the money in the household that "theirs."
What you typically see in a marriage is that one person handles the money. There is usually one person who is better with a checkbook and so they get the responsibility of paying the bills and making sure there is enough to go around. This person can easily manipulate the system especially if the other spouse doesn't pay attention to what is going on.
How do we avoid power plays? First of all realize that when we get married we joined ourselves together and this is "our" household. We are both contributing in one way or the other. The second, and very important thing we should do, is that we should have regular meetings of where we stand financially. This is really powerful and can actually be fun. Setting aside an hour a week or maybe every couple of weeks and discussing the money that came in and where it went will keep both parties on the same page and going in the same direction. If a financial problem arises then it is "our" problem not the other persons.
Yours, Mine, and Ours
While we are now a family I personally think that we should be able to retain some of our personal freedoms. I am all for budgets because when we budget we control where our money goes instead of our money controlling us.
In the family budget there should be some "he money" and some "she money." He money is the money he doesn't know how it is spent and she money is the money she doesn't know how it is spent. You may call this an allowance, but that has a negative note to it for adults. Budget in your own spending money. Each paycheck withdrawal the cash and each person gets "their" money. That person can spend it on whatever they want without reporting it to the family budget. This has a lot of value to it knowing that you still have some personal freedoms that are outside the scope of the marriage covenant. It really works nicely.
Children are a real joy. When my wife and I got married I did not want any children. I just have never been a "kid" person. My wife was wise and never got pushy about the issue and after about three years of marriage I had a change of heart. I now have two beautiful daughters who have absolutely been the joy of our lives.
Many have given us a hard time because from the day we brought our girls home they slept through the night. We never had those 2 a.m. feed or entertain the child nights. A child that sleeps seven to seven is a big blessing. Many talk about the terrible two's or the teenage years, but we have never had those problems. Our girls are out of high school now and they are just absolutely the best!
However, having said that it is estimated that it costs around $300,000.00 today to raise a child from birth to 18 years old. For many, raising their child doesn't stop at 18. Then with the number of blended families you have the added problems of "What are we going to do for the kids?"
Again, a plan should be made before you have children. What is our plan? My plan was that I had 18 years to teach them how to live their lives and once they became 18 they were taking on the responsibilities of their lives. For those 18 years I did everything I could to teach them how to make the right decisions. At the age of 13 they had to start buying their own clothes and buying presents for their friends birthdays. Now, before you think that I am just a mean old man let me finish the story.
At age 13 my daughters also had a much higher allowance then their peers. I figured out what we paid, on average, for the items they would be responsible for and then I gave them an allowance that would cover those costs. It's amazing how designer clothes aren't as important when they are paying for it.
I also made them invest $20 per month (which I gave them through their allowance) and told them if they invested the $20 I would add $5 to it. I then set up an investment account for each of them. They hated this (just like when I made them learn to type), but now they have money in the bank, silver in the safe, and know how to handle their money (they also type very fast). They hated it when we were training them, but they can see now that it worked out very well.
Blended families are a bit more complicated. When you get married and you have children that are not biologically related to your spouse then you need to definitely sit down and discuss, and agree on you will be handling the children in the new household.
I've seen so many parents spending their life savings helping their children time and time again while they drain their retirement. While I am all for helping people, we should be doing what we have planned and prepared to do not what we are forced to do.
Have you ever had Uncle George ask for some money? Your brother, sister, or cousin? This happens all to often and many families have been broken up over these types of issues. Most of the time it is a loan that never gets repaid.
Handling these types of problems before you encounter them is far better then making split decisions. What will you do if a family member ever comes to you and asks you for money? The answer to this is going to vary by individual, but the married couple being on the same page is the key.
If you want to be in a position to help family if they need it then prepare beforehand (but don't tell them you are because their need will come quicker). Let's say you want to have some money to help family, but you decide never to help beyond $500. If a family member comes and asks for $1,000 both you and your spouse knows that we are willing to help, but we are only able to loan you $500. If you decided that you are not going to help, then you both know that we don't have the funds available at this time to help you.
Now it doesn't matter which side of the family it is on because the decision is already made and hopefully the money is already available. The family member will typically say something like, "I will pay you back!" Agree to have them pay it back, but be willing to give it to them no strings attached. If they pay you then great, but if they don't you won't have hard feeling if "you" really just gave it to them.
As you can see in each of these items, planning ahead is a key to success. Communication is key in the planning ahead. We've all made financial mistakes, but let's not let them ruin our relationships.