Alright, prepare yourself for a quick cliché. Communication is key for married couples. It is an age old adage but it’s a good one and it also happens to apply to finances pretty accurately. When you are married you become a team in pretty much every facet of life, especially money, and as a team you should make a game plan so you can work together. However, there are plenty of common financial hazards that couples fall into, and considering that money issues are a leading cause for divorce, this is an area where you should do some planning.
Secrets
Keeping financial secrets from a spouse is really a poor decision. Even with the best intentions, a private account can cause confusion or resentment. How many times have we seen a sitcom husband try to sneak around to buy a gift for his wife only to have her suspect him of something nefarious? Although it’s silly on TV, it does have a degree of truth. Sometimes secrets cause us humans to suspect the worst. So, what can you do if you want to surprise your spouse? Use cash.
Combining Debt
I am all for coming together with your finances as a couple. There are plenty of different approaches to this but I think a total merge is the best option. That is, a total merge except for one thing; debt. The idea here is to keep your debt separate in order to limit liability and exposure. If one spouse has good credit and the other doesn’t, combining debt can hurt you both. However, that doesn’t mean you should necessarily pay your debts separately. Even if you keep your debts isolated you can still work together to pay them off.
No Ground Rules
This may be an embarrassing or painful process, but couples should sit down and develop a budget together, which means combining all your monthly expenses and incomes. After you’ve made a budget you can agree on a set of rules for spending. Some couples have a price limit of what they can pay for without telling each other. For instance, my parents don’t buy anything over $100 without first conferring with one another, and I’ve never heard them argue about money. However, you might think that is very low or very high, either way, you should make a price limit that is right for you.
No Plan for Your Estate
Estate Planning? What am I, a billionaire? You don’t have to be. Having a plan for everything when a tragedy occurs is necessary, especially when a spouse is involved. A living will is important for an abundance of reasons, the first of which is to lift a huge burden off of your spouse when you die.
No Emergency Funds
For a married couple, an emergency fund is essential, particularly if only one of you is working. One of the major causes of debt is experiencing a sudden emergency that puts a strain on your finances. You might be forced to pay for that emergency on a credit card, which can lead to some serious credit card debt followed by the counsel of a debt management service. You should try to build up an emergency fund of around three to six months’ worth of income. That way, no matter what happens you are monetarily prepared.
Where Are the Documents?
Let’s say you or your spouse somehow became incapacitated. Do you both know where to find your family’s important documents? If the answer is no, then there is a problem. This is another reason why communication is essential. Marriage is an advantage because someone is always there to support you when you need them, so it makes sense that you give each other the knowledge and tools to be able to effectively do that.
Whatever you face as a couple, openly communicating and planning are the keys to avoiding pitfalls. Remember to share knowledge about your finances and tackle obstacles as a team.
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