Money arguments are the number one cause of marriage fights and divorce. Why is it then that there aren’t more obvious pieces of advice for newlyweds? Maybe it’s because newlyweds don’t want to hear it. Maybe they think that they are too in love – money arguments would never get the best of them. Maybe outsiders don’t want to ruin this blissfully innocent stage for the couple too early into their marriage.
When we first got married, I don’t remember anyone sitting us down and discussing the possible financial pitfalls we might face as a couple. Maybe they did and I didn’t listen. Needless to say, we experienced plenty of ups and downs and navigated the waters of newlywed financial planning on our own. Do we choose joint or separate accounts? How do we handle household bills? What about the obvious income gap?
These are the lessons that we learned that first year – the lessons that kept our marriage afloat and paved the way for healthy communication.
- Combine Finances
When you say “I do”, you are making a promise to one another and are becoming a team for life. You are combining all aspects of your life and it’s important to remember that finances are not an exception.
You each contribute to the relationship, but quite often in different ways. One spouse might contribute more financially to the relationship, while the other spouse might contribute more on the home front. Maybe you both contribute equally financially, but one spouse makes sure the bills are paid on time and the other spouse makes sure there is food in the fridge. Find a strategy that works well for you, but treat your relationship like a partnership financially. All sources of income come into the same pot and all expenses come out of the same pot. This will make you feel more like a team.
In addition to the emotional benefits of combining finances, it will also open up the lines of communication and facilitate your lives as a military couple. There have been a number of instances where my husband has been deployed without a form of communication and there has been a charge to our account that I have had to dispute or our accounts have been put on hold because we forgot to tell the bank that he would be out of country for the next few months. Having all joint bank accounts has meant that I have full access and full authority to fix these situations.
- Make a Budget Together
We had spoken about budgets in general, but didn’t make an official budget in ink until later on that first year of marriage. Having that official budget made a world of a difference for our relationship.
I personally struggled in the beginning with the fact that we got married straight out of college, moved overseas and I had no income coming in at the time. Since my husband was the only one contributing financially, I felt so guilty spending money on ANYTHING. My husband assured me all the time that I was contributing in other ways and that I shouldn’t feel bad, but I still struggled with it on a personal level. I ran every single purchase by him out of guilt.
Everything eventually came to a head over a potholder (silly, I know). We only had a couple of ratty ones in the house and I thought it was a necessary purchase. My minimalist husband, on the other hand, thought that it was an unnecessary purchase. Why would we get new potholders if those old ones work just fine? I went home and mapped out exactly where our money was going in order to show him that a potholder was not going to break the bank. I sat down with my husband and after tweaking a few numbers, we had a household budget that we agreed on.
We decided that as long as my purchases fit within our agreed upon budget (not one dollar over), I no longer had to run them by him. I not only got my potholder, but I lost my sense of guilt as well. We set financial boundaries on our relationship and created new expectations. I had freedom to make financial decisions within reason and no longer had to bother my husband with the small stuff. I still run larger purchases by him or purchases that I’m unsure about. Any purchase that does not fit into our budget requires a conversation, regardless of who is initiating it.
Some things to consider about your household budget:
- Your budget does not have to be fancy or it can be! You can create it on excel, use a pre-existing template (like the one found here), or just use a good ol’ pen and paper.
- Display your budget somewhere in your home as a reference and a reminder.
- Your budget probably won’t be perfect the first month. If you find yourself struggling to stay inside your budget for a specific category, adjust it up at the end of the month. If you find that you have a huge surplus in a category, adjust it down at the end of the month. Expect about 3 solid months of adjusting your budget before it’s accurate.
- Make your budget realistic. If you say that you won’t eat out at all, you will most likely blow your budget and you will lose motivation to stay within your limit for the other categories. Instead, make reasonable guidelines like one lunch out a week and one dinner out a week.
- Budgets should have a zero balance. I know this seems strange, wouldn’t you want the greatest surplus? You want every dollar accounted for and savings should have its own spot in your budget. Any money left over should be redirected towards one of your goals.
Budgets take a bit of work, but are so worth it. Set yourself up for success by making sure that your budget is up to date and feasible. If you know that there’s going to be a change in pay, adjust your budget. If you know ahead of time that there is going to be a large expenditure this month, adjust the other numbers in your budget so that it will fit. Once you get the hang of it, it will be a piece of cake.
- Have Allowances
This has been another key to our financial well-being. While you are working hard to pay down debt or increase your savings, it’s important that you allow yourselves a little fun.
We created two additional checking accounts, one for each of us. We even have our own “allowance debit cards”. The idea behind the allowance is to give ourselves a little wiggle room for those purchases that don’t fit anywhere else in the budget. We both have the liberty to spend our allowance on (almost) anything we’d like, no questions asked. If I want to buy a month’s worth of Twix, my husband can’t get mad, but he can get jealous.
I tend to spend my allowance more often than not and my husband tends to save his. He will let his allowance build for a few months and then make a large purchase like a surfboard. This has enabled our different spending personalities to mesh quite well.
I will reiterate, though, that all of our accounts have joint-ownership. This includes our allowance accounts. While we wouldn’t touch each other’s allowance accounts, we still have full access to see what the other person is doing with their money (and sometimes chuckle). We do not keep secrets, not even financial secrets.
- Be Honest
Hopefully I’ve made myself clear so far that we do not keep anything from one another. We do not hide shopping bags under the bed. We do not hide receipts in our pockets. We talk openly about our finances.
Finances are only one piece of a marriage, but they do tie into the other pieces as well. If you lie or deceive when it comes to money, you will likely lose trust in other areas of your marriage too.
If you are struggling to stay within an area of your budget, talk about it. If you had a moment of weakness and purchased something you shouldn’t have, talk about it and fix it together.
- Create Goals
A budget may seem exhausting and futile if you don’t have something that you are working towards. Work together with your spouse to create goals and give your budget a purpose. Goals also provide milestones; you are more likely to stick to a budget if you are able to see progress and actually achieve something.
Have you ever heard of a SMART goal? It stands for Specific, Measurable, Attainable, Realistic and Timely. Let me give you an example:
Generic Goal: “We want to save money to travel.”
SMART Goal: “We want to save $3000 to travel to Costa Rica in December 2016 by putting away $177 each month.”
Come up with a handful of financial goals together – some short-term (less than a year away), some mid-term (1-5 years away) and some long-term (5+ years away). Some examples of goals might include paying down debt, traveling, buying a car or a house and saving for retirement.
- Celebrate Achievements
Everyone deserves a little pat on the back sometimes for a job well done as well as a little encouragement to keep up the hard work. As you and your spouse accomplish a goal, reward yourselves within reason.
Have you paid off a credit card? How about you treat yourselves to an extra dinner out this week. Have you fully funded your emergency fund? Maybe this deserves a couple’s massage or a trip to the zoo. The idea is not to blow your budget every time you reach a new milestone, but instead find a small way to celebrate your progress.
There is no one-size-fits-all way to handle your finances. What works for one couple may not work for the next. The important thing to take away from this, however, is to be open and honest about your finances and work together as a team. Hold each other accountable and cheer one another on. Personal finances do not need to be a major stressor in a relationship, but they often are. Set reasonable expectations and get on the same page as your significant other.
For more money tips from Alex, check out Military Planners.