3 Mistakes Newlyweds Make with Money
The following is a guest post by Francine L. Huff, Editorial Director of Super Savvy Publishing and the author of The 25-Day Money Makeover for Women. She writes about personal finance for a variety of Web sites and magazines, and has appeared on many TV and radio shows.
Starting a new life together as Mr. and Mrs. is exciting. But that wedded bliss can quickly turn into a squabble fest for couples who aren’t on the same page financially. To avoid letting poor fiscal habits wreck your marriage take a look at three common financial mistakes made by newlyweds and what you can do to avoid them.
1. Not Talking About Money
The biggest mistake couples make before getting married is not talking about their finances. Money can bring out a range of emotions when people handle money differently. You must talk about how you plan to spend and save money before you get married or you’ll end up fighting about it afterward. Many couples avoid discussing the specifics of their financial situation until they begin to have problems. However, it’s important to talk about how much debt you each have as well as any other financial obligations that are being brought into a marriage. Newlyweds should also discuss their financial goals, such as retirement planning or buying a home. Discussions should include your beliefs and values concerning money. Get a copy of your credit reports and review them together.
2. Keeping Finances Separate
Marriage is a partnership. That’s why it’s important for spouses to work together to manage money and set financial goals. Many newlyweds make the mistake of assuming they can keep their money separate and never get on the same financial page. But combining finances and discussing money issues is important for a strong marriage. It can also help you increase your household’s net worth. “A healthy marriage provides for the pooling of all resources, has a system of checks and balances, and in turn, provides security for long-term investment,” writes Mary Hunt in Debt-Proof Your Marriage. “Prenuptial agreements and separate financial lives say in very loud terms: Don’t expect me to be here for long.” Find a time when you can discuss money without finger-pointing and accusations. Set up a system for paying household bills and make sure you decide who will be responsible for that task. Find out what your common financial goals are and set up a plan to reach them. If children are in your future it’s better to discuss that before they arrive. Perhaps you and your spouse have differing views on whether or not one parent should stay home with children and how that will impact your finances.
3. Loading Up on Debt
Many newlyweds enter marriage with individual debts, as well as debt resulting from a lavish wedding. Spending on the average American wedding is $19,581, according to The Wedding Report, and that does not include the cost of a wedding ring or honeymoon. Even if you strive to keep your wedding to a humble budget, expenses add up, and much of that spending ends up on credit cards. If a couple carries credit-card balances and has other loans, one of the smartest things they can do early in their marriage is set up a plan to wipe it out. Paying down debt will free up more money to buy a home, establish an emergency fund and save for retirement or other large goals. It also can free up cash for fun things like traveling or pursuing hobbies together. After all, if you carry so much debt that you feel like you constantly have to work overtime just to make the minimum payments, you’ll probably end up spending less quality time with your spouse. Financial goals shouldn’t stop after the wedding since that’s just the beginning of a couple’s life together. Whether you’re newly married or soon-to-be married don’t put off having that important money talk. If you’re still in the planning stages of your wedding consider scaling back the event to avoid taking on a lot of debt.