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SALT LAKE CITY — Tying the knot is a big step, and it can take some time to adjust to your new life together. One of the biggest areas of potential stress, at least initially, revolves around finding the best way to manage your finances. With financial difficulty sited as the number one cause of divorce, it is important to work out any and all money issues and make a joint plan for financial security. Here are a few simple, yet essential tips for keeping money troubles at bay.
1. Talk About It From the most basic notion of who will pay the bills to creating a financial plan that will carry into retirement, couples need to have open dialog. Keep in mind, whoever manages the finances has the most stress when money is tight. Many marriage counselors recommend bill paying as a joint activity. Some couples decide to split the bills with each owning responsibility for specific expenses, or they sit down together and make the payments. Whatever method is chosen, it is crucial for both partners to understand their joint financial situation and contribute. 1. Make a Budget Start by listing all monthly expenses, and include everything—even the trips to the nail salon and the daily soda from the vending machine at work. It all adds up, and what might be important to one partner might not rank as high with the other. It may take some negotiation, but it is worth the effort. Learning early to compromise and agree on where and how to spend money sets the stage for more important discussions down the road.
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1. Start an Emergency Fund Most experts suggest having at least $1,000 on hand for emergencies. Then when the car breaks down (and it will) or any other unplanned expenses arise, having enough money to cover them will reduce the financial burden and stress on your relationship. And if you dip into this fund, be sure to replenish it as soon as possible. 1. Plan Date Nights Eating out is expensive, and let's face it, typically the food you are served is not all that good for you. Cooking together can be a great joint activity, and it keeps money in the bank. Seek out no or low cost ways to spend date night, like attending community events. It's important to spend quality time together, but do so with your budget in mind.
1. Pay Down Debt Make a list of everything that is owed monthly including the total amount owed and what interest rates are being paid. In general, it is a good idea to pay off the highest interest loans first; however, sometimes it makes sense to pay off a loan with a smaller balance if it rapidly frees up larger amounts of money to apply directly to other debts. As one debt is paid off, reallocate that money each month to the next debt.
1. Save Six Months of Income The economy is still weak, and losing a job is a real possibility for many Americans. By steadily saving money, it is possible to build a cushion in the event income is disrupted. One of the best ways to build the fund is to have a portion of your pay check deposited directly into a new savings account. But do not be tempted to spend it—this savings bucket should only be used when absolutely necessary, and should be kept entirely separate from your Emergency Fund.
1. Invest in Your Nest You are young and probably decades away from retirement, but if you start contributing to a retirement plan now you will be able to reach your financial goals for the future. There are plenty of tools, experts, and planners available to help you get started and calculate the amount you will need to save. Find the professional financial planner that's right for you and develop a long-term plan that meets your goals. They can help you set strategies that with time and commitment will deliver financial peace.
By reading this, you have taken the first steps to finding financial wedded bliss. Armed with these tips, you'll start your marriage off on the right foot, at least from a monetary standpoint. And if you get stuck, don't be afraid to seek out an expert to guide you along the way.
Sharon Cook is the senior vice president of Marketing and Public Relations for Mountain America Credit Union
