A few weeks ago, I was attending a wedding where I've known the groom for about 20 years. I wasn't one of the groomsmen and didn't know all of them, but I was hanging out with them for a bit. The groom introduced me to them as a writer, and the usual questions followed: What do you write? Where is it published? You get the idea. Upon realising I was a personal finance writer, one of them grinned and asked me the million-dollar question.
"Hey, got any money advice for newlyweds?"
I thought about it for a few seconds and simply offered up the first item on this list, which was received pretty positively by the group, but the conversation moved on from there to other topics.
The question stuck in my head, though. What money advice would I give to newly-weds? This year, I know of several couples that are getting married, including one couple to whom we're close enough that a member of our immediate family is in the wedding party.
This article is for all of them, particularly B and C, B and E and W and A. This comes from my own experience of more than a decade of marriage, interviews and conversations with couples who have been married for many more years than that and countless personal finance books that have passed in front of my eyes. Here are 10 pieces of very valuable money advice for newly married couples.
10. Never, Ever, Ever Hide a Dollar of Spending From Each Other
If I had to give one piece of advice to married couples, it's this. Never, ever, ever, ever hide a single dollar of spending from each other. Period.
Don't get me wrong, I think both members of a married couple should have some pocket money that they can spend freely, but that money should be fairly limited and the total amount should be clear to both people. Once you step outside of that "pocket money", you're almost always going to be causing financial and, eventually, marital problems.
If you have a "hidden" credit card, you're making a giant mistake. If you're taking money quietly out of the ATM and hoping your spouse doesn't notice, you're making a giant mistake.
Why? Your spouse is assuming and planning as though all of the bills are on the table and that money isn't vanishing from the savings account. The financial plans you've made together, whether it's the big things like saving for a house or for retirement or even the little things like paying bills or buying groceries, are reliant on the money you expect to be present being there.
If you're secretly pulling out more and more money for things like hidden credit card bills, hobbies or shopping trips, you're not only damaging those plans, you're also damaging trust.
It's never, ever worth it unless you're intentionally on the way out of the marriage.
Now, again, this does not mean you need to reveal every cent you spend at every moment to your spouse. What it does mean is that you need some sort of clear limit on your individual spending. Perhaps you can agree that you're going to each have $100 a month (or more or less, depending on your situation) to spend on things you want as well as gifts for each other and that money can be spent without question or even a second thought. If you're going beyond that limit, then a conversation needs to happen.
9. Talk About Your Shared Goals as Often as Possible
Speaking of shared goals, it's vital that you're on the same page with regards to what goals you have and how your income is working toward those goals. If you're not working on the same goals, then you're going to be literally working against each other in terms of your use of money and time, which will hold you both back from what you want to achieve.
For example, let's say one of you is focused on retirement savings, while the other person is all excited about saving for international travel. If you're both simultaneously pulling from the same pool of money for this, neither one of you is going to reach your goal with any speed.
The best approach is to sit down together and figure out goals that you share, then figure out a plan to work toward those goals. It might not be an easy process. You might not even know for sure what goals are most important to you. That's also going to be part of the conversation.
My suggestion for a great conversation about goals is to simply talk about what each of you would like from your life in the next five years, then the next twenty years, then for the rest of your life. What would you like your life to look like five years from now (being at least somewhat realistic)? What about ten years or twenty years? What about in your old age?
Then, look for areas where your visions overlap. Those, right there, should be your goals. Make those goals central for both of you, then develop a plan for making those goals happen.
Remember, though, this isn't a one time thing. Your goals and priorities will change, both individually and mutually. Revisit this conversation regularly and make sure that you continue to be focused on your shared goals. Don't be afraid to let some goals fade away as you change both individually and mutually, and don't be afraid to pick up new goals, either.
8. Your Spouse Is Going to Really Tick You off Sometimes. Forgive Him or Her
It's going to happen. You're going to disagree. You're going to see traits in your spouse after living with him or her for five years or 10 years that really annoy you.
It's even easier to get lost in those flaws and to become negatively obsessed with them. It happens. You get stuck on some little flaw and it grows and festers and becomes overwhelming.
Maybe your husband leaves his clothes out on the floor in the bedroom. Maybe your wife has a bit of a bossy streak. Maybe your husband dotes more on his daughter and is more strict with his son. Maybe your wife likes to watch endless reruns of her favourite television show seemingly all of the time.
Don't get obsessed with the flaw. Instead, think about the abundance of things that your spouse does well. Focus on all of those things that you love, then find it within yourself to forgive the flaws.
If your husband leaves out his clothes, just toss them in the basket for him. If your wife likes to be bossy sometimes, go along with it when the things are unimportant to you. If your husband is lax on one of your children, step up a little bit and be more disciplined with that child if needed. If your wife likes watching reruns, read a book instead while cuddling up next to her.
Forgive those flaws. Find a way to live around them. Focus on the positive traits instead. You'll be far better off.
7. You're Going to Get Old. Start Planning for It Now So It's Not a Scary Process
No matter how young you are right now, you're going to eventually be old. It's going to become a challenge to continue to work and you're going to want a few years to be retired and enjoy life before your health fails.
The tricky part is that the younger you are, the easier it is to make that retirement period go smoothly. You can save just a little starting in your twenties to make retirement easy, but if you wait until your forties or fifties, you're going to have to save a lot more of your income.
So, think about what you want from your retired life and talk about it with your partner. Then, start saving. Which brings us to my next point...
6. Both of You Should Save for Retirement in Your Own Retirement Plans
When you start digging into retirement savings, you're probably going to find that one of you has a much better retirement savings plan at work. One (or both) of you may not even have a retirement plan at work.
Given that, it can be really tempting to just have one of you do all of the saving for retirement to take advantage of that superior retirement offering. Don't fall into that trap.
The reality is that there may come a point where you're no longer married, and in that situation one of you will be without a retirement plan and will really wish you had one. You might get some of that money in a divorce, but there's no point in risking that.
Your best approach is for each of you to have a retirement account. Each one of you should jump into a retirement account on your own. If you have a plan at your workplace that offers matching funds, use that plan.
You should each be targeting a savings goal of 10 per cent of your individual income in your individual plans, wherever they may be. If you do that and you start before age 35 or so, you'll both be fine in retirement, whether it's together or separate.
5. There Will Come a Time Where You Will Likely Support Your Spouse. Come to Terms With That (and Plan for It)
In 2008, when I made the decision to go full time working on The Simple Dollar, my wife and I knew there was a risk that it would fail and in that situation, she would be the primary provider for the family for a while. Thankfully, the site took off so that didn't happen.
In 2010, my wife took most of a year off thanks to the Family Medical Leave Act (we live in the US), meaning she spent most of a year without pay. I paid for our healthcare with my income and we just lived pretty lean for a while.
In 2014, my wife started working toward her masters degree, taking classes on the weekends and summers and on some weeknights. It's a little expensive and it means that I'm taking on a higher percentage of the parenting burden than I once did, but in a year or two she's going to be in amazing career shape.
In a year or two, I'm strongly considering going back to school for a masters degree myself, likely in my spare time as I continue to write for The Simple Dollar.
In each case, one partner's career situation changed the relative financial burdens (and other burdens) in our marriage. It happens. Sometimes your partner will go through a challenging employment patch. Maybe your partner will want to go back to school. Maybe you will want to be a stay-at-home parent for a while, or to homeschool, or something else entirely.
It's going to happen. Don't be frustrated by it. Be glad that you can be there for your partner when changes happen, and be glad that your partner will be there for you when those changes occur. Because they will occur.
4. Start an Emergency Fund. Now. You'll Never Regret It
First of all, what exactly is an emergency fund? It's simply cash put aside, usually in a savings account, for life emergencies. An emergency fund can step up during a job loss, during a car breakdown, during a family emergency, or for almost anything else that comes along unexpectedly and demands money.
Why not use a credit card? The biggest reason is that many emergencies make a credit card no longer useful. Identity theft. A stolen wallet. A bank cancelling your card or reducing your credit limit. Those things can be real emergencies and a credit card won't help you. Cash is king. Cash will get you through.
So, start building one. Set up a savings account with both of your names on the account — possibly at a bank that isn't your normal bank so that it's a little bit harder to access on the spur of the moment — and set up an automatic transfer into that savings account. Make sure it's not incredibly easy to get into that account — you should be able to access it, but not at a moment's notice with a card in your wallet. That keeps you from tapping it in a moment of temptation.
The account will slowly grow over time. Just leave it alone. Use it only when you need it.
With an emergency fund, an unexpected problem won't turn into a crisis. It won't turn into a fight. Instead, you have the money to deal with it and life will go on.
3. You Don't Need as Big of a House as You Think You Do
Many newly married couples start thinking quickly about buying a big house to live in. They have visions that involve the big beautiful house in the perfect neighbourhood with the two and a half kids running around in the backyard.
The problem is that the "dream" is expensive. The bigger the house, the bigger the bills. It means a bigger mortgage. It means bigger utility bills. It means more insurance. It means higher taxes. It means higher maintenance costs.
Another problem is that a big house usually just winds up being a bunch of storage space for your stuff. Most people end up using only a few rooms in their house regularly — their bedroom, the kitchen, their primary bathroom and maybe the living room where the television and/or computer is. The rest end up being used for storage or set aside for guests.
It's more space to fill up with stuff and stuff is expensive.
Instead of dreaming about and shopping for a huge house, go small. Go really small. Look for an inexpensive small home, spend a little more to fix it up the way you want, and keep your bills low. You'll find it much easier to be able to afford to do what you want in life.
2. You Don't Need as New and Shiny of a Car as You Think
The arguments made above in favour of a smaller house also apply to your cars. A shiny new car is expensive. It means a higher car payment. It means higher insurance, too. Those bills really add up.
In most situations, the best bang for the buck in terms of a car purchase is to buy a late-model used car from a reliable manufacturer, driving it until problems begin to mount, then replacing it with another late-model used car from a reliable manufacturer. (I trust Consumer Reports when it comes to identifying reliable manufacturers and look at Toyotas and Hondas first.)
This plan allows you to have lower car payments when you're actually paying off the car, then you have a few years without a car payment. During those years, put those "car payments" into a savings account so that when it's time to replace that car, you'll have enough cash to either make a giant down payment or to pay for the car in its entirety. Get on that cycle and you'll never have a car loan again.
Establish this car-buying cycle together and you'll end up putting aside a pretty small amount each month into savings and you'll never have a car payment again. You'll also have reasonable insurance bills to boot.
1. Spend Non-Passive Time Together as Often as Possible
This final tip is all about the feeding and care of a marriage. The reality is that half of all marriages end in divorce. That's a painful statistic, but it's reality.
Another reality: Divorce is expensive. Solicitor fees, court fees, rapid changes in lifestyle and housing... those can be very, very expensive.
One of the best financial moves you can make as a married couple is to simply keep your marriage strong. If your marriage is strong, you won't get a divorce and that's going to be one of the best things you can do financially.
How do you work on your marriage? The best thing you can do is spend time together, preferably time that isn't spent on passive things like watching television. Do active things together. Talk to each other often.
Sarah and I make it a point to have at least a few healthy conversations each and every day. Yes, there are days where we don't get much face to face time until after the kids are in bed in the evening, but at that point we'll always talk about our respective days. We talk about goals. We talk about the state of the world. We talk about the things in the world that are on each of our minds.
We also do a lot of things together. We play board games. We go for walks. We exercise a little. We work on projects around the house.
One of our favourite things to do together is housecleaning. We'll both spend 20 minutes cleaning the kitchen and living room at the same time, so we talk together during the entire cleaning period. It's a surprisingly effective way to bond, because not only are we having a great conversation, we're both working toward making the house better for all and we know that our partner is also helping.
Do things together. Set aside time for it if you need to, which may be necessary if you have children. Doing things together can become the glue of your marriage.
A marriage can be a wonderful thing. Having someone in your life that you can rely on, who genuinely loves you, and who is making life choices that benefit you as well is a life-changing and life-affirming thing.
However, a marriage isn't an automatic thing. It's not always going to be easy, and money is often one of the biggest challenges in marriage.
If you use these ten pieces of financial advice and take most of them to heart, you'll find that the financial problems (and some of the other challenges) in your marriage become much easier to handle.
10 Pieces of Financial Advice for Newly Married Couples [The Simple Dollar]
Trent Hamm is a personal finance writer at TheSimpleDollar.com. After pulling himself out of his own financial crisis, he founded the site in late 2006 to help others through financially difficult situations; today the site has become a finance, insurance, and retirement resource. Contact Trent at trent AT the simple dollar DOT com; please send site inquiries to inquiries AT the simple dollar DOT com.