Your decision to marry was a wise financial move. Marriage doesn’t insure wealth. On average, however, married couples accumulate four times as much wealth as the never-married or divorced. The never-married and divorced, along with their children, are also about six times more likely to live in poverty than married couples and their children.
The Michigan Association of CPAs (MACPA) published a list of several topics every married couple should address, including the following:
• Values: How you see money effects how you spend it. Money can be a source of security, a means of obtaining status or a way of helping others. Some people need predictability; others want flexibility.
“Money Habitudes Guide for Couples,” which is available online, can help you and your spouse learn how you see money. MACPA explains, “The more you understand your spouse’s values and attitudes concerning money, the easier it will be to avoid conflicts and misunderstandings.”
• Money management: Will you have one checking account or separate accounts? MACPA notes, “Generally, it’s easier to manage household expenses from one joint account,” even if you have dual incomes.
Decide who will be primarily responsible for paying bills and balancing the checking account. This should be the person who enjoys opening the mail and worries about getting bills paid on time. To avoid overdrafts, the other spouse should not write checks or use a debit card without first talking to the bill-paying spouse.
Establishing a budget is important. Financial adviser Ron Blue writes that lack of a budget is a common error couples make. Budgets keep you on course for your long-term goals. Without a budget, Blue writes, you’ll “live as a responder,” responding emotionally to “sales” and impulses for things you don’t need.
Saving is equally significant. MACPA explains, “Your first priority as a couple should be to set up an emergency fund equal to three to six months of earnings.” Then establish an automatic savings program, putting money into a long-term investment program.
• Debt: Blue warns that “debt becomes a trap — getting in takes no effort, but getting out can be next to impossible.” MACPA suggests couples devise “a workable strategy for paying off high-interest loans and credit cards.”
Some debt, such as a home mortgage, may be necessary. Even these, however, should never involve payments beyond what’s realistically affordable. When computing “what’s realistically affordable,” don’t include current overtime or occasional bonus checks. Those are best put into savings.
• Goals: MACPA writes that your goals may include “buying a house, starting a family, returning to school or opening your own business.” You and your spouse should discuss your plans and “begin to take steps to align your financial plans with your overall goals.” Your budget and savings plan should reflect your goals.
• Retirement: “It’s never too early to look ahead to spending your golden years together,” MACPA writes. Talk to a financial adviser and set up a long-term investment plan, which reflects your values, goals and retirement dreams. By starting now, you can make your dreams come true.
Financial management is dead last on most couple’s list of “fun” topics to talk about. By talking about money openly and taking steps to reflect your values and meet your goals, however, it is much more likely you’ll live “for richer” than “for poorer” and have greater joy in your married life together.
©2015, All Rights Reserved. James Sheridan uses only printed materials as sources, unless otherwise noted. His website is www.marriagedoneright.com. This column is the personal opinion of the writer and does not necessarily reflect the views or opinion of The News-Sentinel.