Most couples will face a number of different problems throughout their marriage, some of which may even end in divorce. In fact, money problems are frequently cited as the number one cause of divorce.
Money problems can take multiple forms - neglecting to set long-term and/or short-term financial goals, assuming too much debt, wasting money on superfluous purchases, and so forth. The marriage may be further strained if such money problems result in spouses blaming each other or attempting to conceal the extent of the problem.
The financial pitfalls from poorly managing joint finances can be disastrous for the entire family. There are several proactive steps that you, the couple, can take to help avoid a financially unsound marriage:
1. Designate specific purposes for your joint income. Each financial goal, or purpose, should be accompanied by a specifically designated bank account. This may mean that you can only afford to start each account with the minimum required deposit, but the important thing is that you've set your goals and designated a savings portal.
2. Make it a priority to have an open, effective, timely, and focused line of communication about your finances. Computer programs like Microsoft Money and Quicken can help you keep track of what you earn, spend, and owe. In most situations, it should only take a couple 15 to 20 minutes to review their finances together at the end of each day or week. At the very least, each spouse should give the other a periodic report on the financial tasks and obligations they're overseeing.
3. Some couples agree that they'd like to see their money grow from investing in real estate, the stock market, or commodities. Make sure that the research is done before any investments are made, including weighing the pros and cons of each investment option. Construct a money-making strategy from the investment ideas that interest both of you.
4. Make sure your marriage is financially fair. Some couples choose to use a prenuptial agreement to create financial fairness in their marriage, especially when there's a large discrepancy of wealth between the future spouses or the marriage is occurring late in life. Prenuptial agreement or not, if money-related tasks are going to be divvied up, then you need to ensure that you both feel capable in and comfortable with your assignments. While spouses certainly don't want to scrutinize every single purchase made by each other, it's important to clearly communicate any spending concerns and how such might be interfering with the family's financial goals.
5. The unexpected should be part of your plan for the expected. Protect your family's financial security now and in the future with disability, life, and health insurance policies. Each spouse should have a will and power of attorney. Spouses that own a business should keep separate books for tax purposes, as this will help prevent the family's and business's finances from becoming intertwined.
With a little work and proactive planning, you can help ensure that you have a financially sound and secure marriage. Just don't forget that financial happiness is an ongoing process and will require consistent and open communication.
Click here to return to Amity Insurance E-Newsletter September 1, 2011.
