Can’t get on the same page with yourbetter half about money? You’re not alone. Accordingto a 2015 SunTrust Bank survey, conflicts over finances are the leading cause of marital stress.
My husband and I spent the first 5 years of our marriage firmly rooted in financial denial. Instead of fighting about money, we barely talked about it. We just kept swiping our credit card and blindly hoping for the best.
By the timethings reached their boiling point, money wasn’t just thebiggest cause of our stress. It was the onlycause. I feltashamed, stressed and stuck— with no one to turn to and nowhere left to hide.
Thankfully we turned things around – due in equal parts toconstantcommunication and dogged determination.We learned a lot of hard-fought lessons along the way — lessons that may seem like common sense to some of you, but may still be struggles for others.
7 Things Married People Need to Know About Money
#1. Budgeting isn’t a bad word.
Budgets have gotten a horrible rap. People think that they don’t need a budget if they’re not in debt.Or thatthey can’t be spontaneous if they have a budget. Or that it willtake hours and hours of time they don’t have.
Wrong, wrong, and wrong!
A budget is yourroadmap for your money — even if you don’t have any debt! In fact, especially if you don’t have debt, because when you don’t have monthly payments, you have a lot more money with which to intentionally spend, save and give. Having a budget doesn’t hamper your spontaneity; it give you the freedom to spend (and save and give),guilt-free.
If you don’t have a budget, you’re letting your money slip through your fingers. Get on a budget and be the boss!
P.S.Make sure you have a category in your budget called Blow Money.Each of you gets some amount of money, every month, that you can spend as you wish — without having to be accountable to anyone about it. Even if you can only afford for that amount to be $10 each, it’s a breath of autonomy that I know you’re going to crave.
#2. Tracking your expenses in real time is the only way to make sure you stick to your budget.
A budget is your very best, most educated guess as to how much you are going to spend this month. Tracking iswhat happens in real life.
That’s why you need to to trackin real time.
It’s not enough to look back at your bank statementsor credit card billsat the end of themonth — because if you’ve overspent, there’s nothing you can do to fix it at that point.
Regular (even daily) tracking of your spendingprovidesawarning sign whenyou’re about to go over budget. If you are, you can either stop spending, or readjust another category in your budget to “absorb” that overage. Tracking ensures that your budget stays balanced, every month.
P.S. It used to be that the onlyway to track your spending was to write it all down—drudgery. Today, it’s so much easier! There are all sorts ofsoftware andapps to seamlessly integrate tracking into your day-to-day life. (The two I recommend are Mint.com andYNAB.com (You Need a Budget). Mint is free, YNAB is $60 but if you click through this link you’ll save $6. I switched from Mint to YNAB last yearand I am loving it. I’ll write another post soon about that change I wrote this post about it, if you want to read more.)
#3.Spend the money this month that you earned last month.
#3.Spend the money this month that you earned last month.Back to budgeting for a minute, dear bride.
Remember when I said a budget was your best, most educated guess? Well, thereare two parts to every budget — the income and the outgo. The outgo part, by virtue of the variability of life, is your best guess. You may think you’re going to spend $100 on your electric bill, but if they raised your rates and you didn’t know it yet, that bill may actually be $120.
The income part of your budget, however,shouldn’t have to be a guess or even a prediction. It should be a fact. And the ONLY way to guarantee that it’s a fact is to budget withmoneyyou’vealready earned.
I figuredout the trick of living on last month’s incomethroughmuchtrial and error with our variable income budget. But evenif you get a regular paycheck, this is still good practice because it puts a buffer between you and life. It means that you’ll be okay this month, even if you lose your job, or the bank loses the check, or your companyfallson hard times andcutseveryone’s paycheck by 20%.
You won’t be okay forever. But you’ll be okay this month.
Getting a month ahead won’t beeasy. It may take you a few months — or more — to work up to this. But the sooner you can reach this goal, the easier budgeting will be. And remember, when you’re budgeting, you’re the boss!
P.S. Along these same lines, sink funds — for future expenses — are going to make your life (and your budget) a whole lot easier, too.
#4. Life is unpredictable, so save some money for those rainy days.
The only thing I can guarantee you, sweetbride, is that life is going to surprise you. Sometimes the surprises will be good. Butother times they won’t.
When you have money — a big pile of money (like more than $10,000, which I know right now sees as impossible as human flight) — sitting in the bank, you are far betterequipped to deal with life’s unpleasant surprises.
Now don’t misunderstand me. No amount of money can inoculate you from the sometimes gut-wrenching pain ofliving a full life; but it can allow you to focus on what’s most important, rather than getting all twisted up in knots overthe finances of a particular situation.
And for thenon-gut-wrenching, regular-rainy-day-type situations? Apile of money allows you to be more rationale, more loving, and more calmin your decision-making. Trust me: Whenthe sliding glass door shatters, your emergency fund will keep you from screaming at your kid and blaming your husband.
P.S.As a wedding gift to each other, set up a thirty-year term life insurance policy. Seriously consider disability insurance, too. Again, no amount of money canmitigate the emotions of a calamity that would cause you to cash in on such a policy, but if G-d forbid you should have to, you’ll be supremely grateful for that responsible foresight.
#5. Avoid debt like the plague.
Debt is a noose around your neck. You may think it’ll make your life easier to just buy it now and figure it out later. It won’t make it easier. It will make it immeasurably harder. Freedom and debt are conversely related. The more debt you have, the less freedom you have.
Even if you really, really, really need something right now, stop, walk away and figure out a plan to pay for it right now.Resist every temptation to put that new oven ona payment plan.
Waiting until you have the cash means you’re not going to be carrying around an albatross ofdebt. But more so, waitingmean you’ll be making better, more rationale choices. It’s far easier to spend someone else’s money (ie the credit card’s or financing bank’s) than it is to spend your own cash.
Butguess what? Thatloanis actually your money, too. Or it will be. For the next 60 months or so until it’s paid off.
And all those interest payments? That’s also your money. Money that could be going toward living your life, but instead is going toward paying off your past.
Don’t buy now, pay later.
Save now, buy later.
And P.S. If you already have some debt, then make it your #1 priority in life to pay off that debt as fast as humanly possible. Debt-free = freedom.
#6. Save now for your retirement.
I know retirement seemsimpossibly far off on the horizon. But here’s a tip that I wish I’d been smart enough to tell you ten years ago.
Thanks to thepower of compound interest — which Albert Einstein supposedly called “the most powerful force in the universe” — the earlieryou start to save, the richer you’ll be.
Interest rates will vary, of course, but let’s say you can get a historic return of 9.5% and you want $2 million at retirement. If you start saving when you’re 20, you only need to put aside roughly$375 a month for 45 years.What if youdon’t start saving until you’re 30? Then you’ll have to set aside$600 a month to get to that $2 million by retirement. And if you don’t manage to get your act together to start saving until you’re 40? $1000 a month.
If you started out saving $1000 a month from the time you were 20, you’d have somewhere around$8.4 million at retirement (assuming a 9.5% rate of return)!
P.S. Your results willvary, of course, depending on the compounded rate of return. The point isto start as early as possible, invest consistently, and do it forthe long-haul, in order to build thatnest egg.
#7. Talk with your husband about money. Often.
Did you know that fights about money areone of the top threereasons for divorce? (Money fights share thisdubious distinction with fights about religion and fights about family.)
Figuring out how to talk about money in a healthy, respectful way iseasier for some couples than others. But know this:Everyonehas some baggage about money and they all have to work through it to get to that stage in life we call “being an adult”.
Just like you and your future husband will probably have different ideas about what constitutes a clean kitchen or effective discipline for a two-year old, money is something that needs to be negotiated.
One of you may be better at the “math” of money than the other (and thereforehandles the ‘technical’ side of making and maintaining the budget), but both of you have to make thechoices together.
That’s what being married is all about. It doesn’t matter who earns what. As soon as it hits the bank account, it’s both of yours — and you both have to decide how you’re going to allocate it.
Remember at all times that you love each other. That you respect each other. And that your future is tied to your ability to get on the same page with each other.
When the two of you decide on your budget, that documentis your word. And you must commit to honoring your word. If you agree tospend $100 on clothing this month, you can not spend $150. And you also can not guilt trip him into “letting” you spend $150. Same goes forhim. If an XBox isn’t in the budget you both agreed on, then it’s not in the budget. Period. End of story.
P.S. If you find yourselfarguing with your husband overmoney, then that’sasign that you aren’t talkingenough about money. Maketalking (not arguing) a regular habit byscheduling a time todo it—after those future kids of yours have gone to bed.
P.P.S. I recommend wine and/or chocolate. It helps with the talking.
