As you and your spouse celebrate Valentine's Day over a candle-lit dinner, you may want to avoid romance-killing topics like, "Honey, let's talk about our financial future." But you really should have that conversation sooner rather than later if you want to keep your relationship on a healthy footing.In any marriage, major life changes may require you to reassess how you manage the family finances. Unfortunately, many couples don't make time to plan ahead and are later caught off guard. For example:
- If you have children, are you budgeting for their medical care, food, clothing, education, etc.? A bigger family also sometimes means needing a bigger house -- and downsizing after they leave the nest.
- As your parents age, you may need to care for, house or financially support them.
- During hard times, grown children and other relatives may also tap you for assistance.
- Changing career goals, continuing education and taking time off work to raise a family can all impact your income and ability to save for retirement.
- Do you have an emergency fund for unexpected events like urgent medical expenses, layoffs or reduced work hours or being forced to move for a job?
- And, speaking of retirement, are you still on the same page about when, where and how you wish to retire? Were you counting on home equity to help finance it?
If you haven't had a financial heart-to-heart lately and aren't sure what to do next, here are a few suggestions:
Make a financial "date." You're both busy and have probably divvied up financial chores like bill paying and checkbook balancing. But even if you're in complete agreement on money matters, the family "accountant" should keep his or her spouse in the loop -- if for no other reason than so they can easily take over in an emergency.
Set up monthly or even weekly meetings to discuss things like bill payments, progress or setbacks regarding savings goals, budgeting for upcoming expenses (property taxes, insurance premiums, back-to-school supplies, etc.), and strategies for coping with unforeseen expenses (car repairs, emergency dental work, tuition increases, etc.)
Don't postpone uncomfortable discussions. Should one of you accidentally bounce a check or miss a payment, don't wait until your next powwow to address it or try to hide the problem. You'll only make matters worse and create an atmosphere of mistrust. Fess up and deal with the issue right away -- you might even save yourself additional late fees or penalties.
Be united. When the news isn't good -- say your 401(k) balances tanked last quarter or one of you got laid off -- communication is all the more important. Whether you need to temporarily tighten the budget or make a major life-altering decision like postponing retirement, talk it through and be prepared to compromise so neither party becomes the bad guy.
Reaffirm your goals. Couples often start out with one game plan but then life deals an unexpected hand and goals change. Touch base periodically on how you both feel about such major issues as family size, home ownership, career changes, financing college for your kids (or yourselves), financial risk appetite, when and where you'll retire, and taking care of elderly parents.
Update legal documents. Make sure your legal and financial documents are up to date and reflect your current wishes, including wills, financial and medical powers of attorney, life insurance policies, retirement accounts, investment funds and any other accounts where beneficiaries or people who control your health or finances are named. This is especially important if you've added -- or lost -- family members in recent years.
Follow your budget. Some of the worst marital disagreements occur when one or both parties sabotage the family budget. If you don't already have a budget, many free tools are available online. Check out the U.S. Treasury Department's MyMoney.gov, Mint.com and Practical Money Skills for Life, a free personal financial management site run by my employer, Visa Inc.Seek help. If you discover that you've gotten off track or need help realigning your financial goals, a number of outside resources are available:
- The National Foundation for Credit Counseling can help you locate a free or low-cost credit counselor.
- You can find a financial planner or advisor through the Financial Planning Association, the Certified Financial Planner Board of Standards or the National Association of Personal Financial Advisors.
This article is intended to provide general information and should not be considered legal, tax or financial advice. It's always a good idea to consult a legal, tax or financial advisor for specific information on how certain laws apply to you and about your individual financial situation.
To participate in a free, online Financial Literacy and Education Summit on April 23, 2012, go to Practical Money Skills.