Wednesday, September 9, 2009

Sense When It Comes To Your Cents

I have received many questions regarding the financial arrangements of married couples. Specifically, coordination of bill paying, pluses/minuses of joint bank accounts, and how to reconcile differences of opinion on investing and saving. The manner in which a couple facilitates their finances says a lot about their relationship.

I am a firm believer in the unification of finances when a couple gets married, at least in terms of the income made from the time of the wedding forward. I also think that both partners, regardless of who is sending in the bill payments, should monthly review all bank and credit card statements. In addition, if a couple has a strict budget, any major purchases must be run by the other partner first. This may seem obvious to many people, however arguments in relation to finances are the most common marital disagreements and simple steps like this can remove any added friction.

BEFORE a couple gets married they must establish how they like to spend money. For one person a spending priority might be travel, or for another it may be art and decor for the home. Other people love eating out and gourmet ingredients while someone else might drive an expensive car. It might not seem like it matters when you're dating, but its a must before marriage to decide on spending priorities. Two people don't need to have the same spending priorities to be together, but they must respect the other partners thought process and agree on an overall spending mentality.

Here are some good questions to ask to get to know your partner's financial disposition:

1. How much money is necessary for you to have in your checking account at one time (ie. liquid funds that are easily accessible) to feel secure? This is an important question because some people feel more comfortable living month to month in terms of cash flow, and other feel safer having more money in a reserve.

2. What leisure activities are your top priority in terms of spending? For some it will be a gym membership, others it will be skiing in the winter or going to movies. While it shouldn't matter exactly each partner wants to spend money on its important to know what is most important to each other.

3. What type short term and long term financial goals do you have and what is your ideal time frame? For example, buying a home within the next 5 years, retiring at 50, paying off student loans or getting out of credit card debt as soon as possible. This type of discussion allows critical financial details to be discussed in a constructive way. You'd be surprised at how many couples get engaged without knowing their partner has debt and/or certain financial expectations that have never been expressed before.

Overall, always remember:

It is a lot easier to slowly gain more and more materially, than to live lavishly and lose it using sense with your cents now can payoff in the future...

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