Money can't buy you love, but fighting about it can buy you a whole lot of marital strife. In fact, money issues are the primary reason many couples untie the knot. Though it may not sound romantic, tending to your finances is a key part of nurturing your relationship. Here are five ways you and your partner can achieve a more perfect union.
- Have a Common Vision. You can't plan for the future if you can't decide on what the future will hold. Talk with your partner about your goals and expectations. Explore questions such as: Will either of you be furthering your education? Do you plan to have children? Examine your views on spending, saving and what retirement looks like. Do you have different money personalities, such as one partner who is frugal while the other likes to spend? Are there any unique issues, such as extraordinary amount of debt from one or both partners? Once you've answered these questions, set priorities and develop a plan to help you realize your dreams.
- Divide and Conquer. Once you've got a financial "game plan," outline the steps you need to get there. Divide up the responsibilities and decide which partner will handle each project. Both partners must have a stake in their financial future. Delegate tasks to the partner who is best suited to them. With each couple I work with, I find one is often more suited to the job done than the other. If one is better with numbers, have that person draw up budgets and create spreadsheets. The overseer role should go to the partner who is most organized and interested in financial matters.
- Meet Your Match. If both partners work, compare each of your employers' retirement savings plans benefits. If you can't contribute the maximum allowable to both 401(k)s, then a fall back position should be to evaluate both plans and employer matches to make sure you contribute enough to trigger the maximum "free money" (employer match) for your family. The earlier you start, the sooner compounding can work for you and your spouse to maximize the growth of your 401k accounts over time.
- A Careful Borrower or Lender Be. Before taking out a loan, make sure it fits your family's cash flows, so that you can make the monthly payments. While helping family or friends financially is clearly a generous act, it can create confusion, stress and hardship, if you don't set up concrete written guidelines ahead of time. According to a survey by Money magazine, only 30 percent of people who made a personal loan were paid back in full. Lend only as much as you can afford to lose, and be aware that loans to family members can affect inheritances down the road.
- Expect the Unexpected. Keep between at least six to nine months' worth of living expenses in a readily liquid short-term bond or money-market account that can be liquidated on a one-day notice to provide liquidity to deal with the unexpected. The amount kept in your emergency fund will depend on the size of your family, whether you carry substantial debt and what types of insurance coverage you have among a wide variety of other family priorities. This way you won't have to tap your retirement funds or borrow at unfavorable rates in the event of a crisis.
Review Your Progress. It's important that both of you know where you stand financially. Consider engaging the services of a registered investment advisor or other financial professional, to help you objectively review your financial situation regularly, including your net worth, debt, budget and upcoming expenditures. This approach will take the emotion out of the process and the professional will help you evaluate how you're doing and map out any additional steps you need to take to stay on track to meeting your life goals and achieving marital bliss.
The information in this article is general in nature and may not apply to your own financial situation. Please consult your own professional tax, and/or financial advisor regarding this information and your own personal financial needs. Please see my full bio for a full disclosure statement.
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