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Marriage and Money: What Every Couple Should Know About Bad Credit and Becoming Debt FreeYou've been planning the day for a year, everything is perfect. The two of you have decided that you will move into his apartment and you will use your furniture. You are starting out debt free and will have joint bank accounts, splitting everything 50/50. Happily ever after, here we come... or so you thought. Financial disagreements, and not just ones about bad credit, are one of the biggest reasons for divorce in the United States. Credit counseling services say that determining what type of money attitude you have, having open communication, and sticking to a monthly household budget will put newlyweds on the right track straight from "I do". Do you find security in knowing that you have that large savings sitting in the bank, building for your future? Or does a new plasma TV really make you feel good? Determining whether you are a spender or a saver is crucial to making your relationship work. While savers find security in having ways to save money and building that nest egg, spenders will find the same comfort in material purchases. The spender tends to be much more of an impulse buyer, while the saver can walk into a store, get exactly what they need, and leave. Savers may not understand how the spender can "throw" money away on frivolous vacations or new clothes, but in the same regard, the spender may feel the saver never has any fun. The key in a spender/saver marriage is compromise. Understanding the differences in each other's money attitude is the first step toward both partners feeling comfortable in their finances. The spender must realize the having financial security and living a debt free lifestyle is extremely important for the saver to feel grounded. Likewise, the saver must realize that having a million dollars in the bank is not necessary to have financial security. Contributing to a savings account without imposing a pauper-like lifestyle on the spender will squelch any feelings of resentment from the spender. Compromise and communication are crucial to the spender and the saver understanding each other. Communicating goals and struggles to each other is a very important factor in a marriage. One issue that many newlyweds do not think to address is the merging of their money. Deciding between separate accounts, joint, or a combination of the two can definitely be a touchy subject. Sitting down and openly discussing each other's feelings on this matter is essential. More than likely, up until the nuptials, each partner has managed their own account. There was no one to look over your shoulder and review every purchase you've made and make sure you didn't have bad credit. Not to mention it is much more difficult it is to keep track of an account balance with two people dipping into it. Having a joint account can sometimes just be too overwhelming for a couple. Likewise, having separate accounts can become a hassle when trying to divide paychecks and decide who will pay what bill this month. During the credit counseling process, experts may recommend having "his, hers, and ours" checking accounts. The "ours" account will have both paychecks deposited into it. The monthly household fixed expenses are paid from this account as well as a designated amount that is deposited into ‘his' and ‘her' account. This amount is each partner's discretionary income. Couples should calculate how much the monthly bill add up to, then determine what percentage of each paycheck will be used to pay that amount. It may not necessarily be even-steven depending on how much each person brings home. In cases of one income households, the stay at home spouse still needs to have discretionary spending. However, referring to that money as an allowance can be very insulting to the stay at home spouse. No matter which method couples choose, communication will be key to making it work. Even having separate discretionary accounts, couples should always discuss large purchases (usually anything over $150.00). Openly and honestly discussing finances with each other will help make the transition from me to us much smoother. Even before the wedding, every couple should prepare a household budget that both partners can live with. The first thing that should be done is analyzing your entire financial situation. Sit down together and list out all of your fixed expenses (mortgage, car payment, utilities, etc.), then list any variable expenses (gas, groceries, entertainment, etc.), and lastly list any student loans and credit cards debts that you may have. If you are debt free, congratulations! Once you have a view of the entire financial picture, develop a monthly household budget. This can be beneficial in finding ways to save money. Family Credit Management Services recommends following this general guideline for allocating your income:
Sticking as close to these guidelines as possible will help you and your spouse live within your means, which is very important to financial stability. While it may not be the most comfortable discussion, all newlyweds should sit down and discuss finances, including the perils of bad credit. Understanding your partner's mentality about money will help you both devise a plan to stay debt free and keep your finances in check. Compromise and communication are going to be the key ingredients in a successful marriage, especially where finances are concerned. |
