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LET’$
Talk
May/June 2001
In a popular
comic strip, a preacher is performing a wedding ceremony: “And do you,
Jane, take Tom to be your husband?”
The bride answers, “I do.”
The preacher replies, “Then why won’t you tell him the PIN
number for your ATM card?”
If nervous
laughter escaped your lips, perhaps you’re among the many couples who
keep money secrets from their
mates, from benign ones like you PIN number, to serious ones like credit
card debt. Yet the experts agree that being open about financial issues
sets the foundation for a good future. Sounds
great, but who wants to have those conversations in the flush of love and
excitement that is engagement? After
all, it’s a marriage, not a merger of Fortune 500 companies.
Nancy, 36, a
hairstylist, worries about how much her fiancé Kevin, 40, a fireman,
owes. Whenever she’s asked
him to reveal the extent of his debt, he’s said, “Don’t worry about
it. I’ll take care of it.”
But, declares Nancy, “I want to know what I’m really in for.”
She is right to
be insistent, says Rennie Gabriel, author of Wealth On Any Income (Gabriel Publications).
If you get talking, agrees Steve Pybrum, CPA, author of Money
and Marriage: Making It Work Together (Abundance Publishing),
“you’ll have a much healthier relationship.”
Here are the Big Three money topics to get you started.
1
ARE YOU A SPENDER OR A SAVER?
Discussing
spending habits is probably a couple’s first test of full disclosure.
Erica, 24, a business analyst, and Carlo, 29, a debt consolidation
manager, were married on January 5, 2000.
In this union, it’s Erica who fills the spender role.
“I’m addicted to Victoria’s Secret catalog,” she admits.
“But when we began saving for a house, I agreed not to order
anything.” But, sneakily,
Erica was having purchases shipped to her sister’s address.
On the positive
side, Erica fessed up, the couple had another opportunity to discuss their
finances, and they agreed anew on a plan.
On the potentially negative side, however, Erica’s spending has
affected their saving schedule, which angers Carlo.
Couples must
discuss not simply how much they
spend, but their attitudes about spending.
“One spouse said she felt she still had money as long as there
was room left on the credit card.,” says Gabriel.
But if one of you has that attitude and the other is the sort who
panics when the bank account dips below a certain amount, “your
differences will only magnify after you’re married,” he warns.
There are ways
to avoid a spending spiral. Establish
a set amount of spending money for each of you for the week.
Never cash an entire paycheck; deposit it, then withdraw the
agreed-upon amount. Track
your money utilizing the tools that work best for you, whether it’s a
notebook or a software program. Each
month, compare actual to budgeted spending.
Since expenses are incurred daily (lunch), monthly (mortgage) and
annually (car registration), plan ahead for months with high costs, such
as Christmas. Eventually,
you’ll be able to chart out the year.
If you’re
half of a spender/saver relationship, use each other’s strengths and
weaknesses to balance your overall financial picture. John, 26, and Catherine, 27, have been engaged since December
1999. Both are attorneys, but
only Catherine is a “financial enforcer.
“Last year, I allowed Cathy to place me on a budget to help pay
for the wedding,” says John. Thanks
to her efforts, they can afford the wedding of their dreams, and are well
on their way to a solid financial future.
2
CONTROLLING CREDIT-CARD DEBT
How destructive
can debt be to a married couple? “The weight of it can sever a relationship,” says Pybrum
grimly. Adds Gabriel, “If
one of you has excellent credit, and the other has poor credit, you can be
in for a surprise when you want to get a mortgage.”
It’s
unrealistic to vow never to incur debt, but the way you handle it will
determine its impact on your marriage.
Again, open and honest communication—coupled with a realistic
payment plan—will prevent financial obligations from coming between you.
To get a handle
on debt, choose your debts wisely. Take advantage of the low interest rates on student loans by
setting a five- to seven- year payoff schedule. And avoid higher interest rates, like those most credit cards
charge, by paying them off as soon as you can.
In fact, if you have savings, you’re better off using it to pay
off your credit cards than letting it sit there earning minimal
interest.
Take a look at
your credit card accounts. If
you’re like many American couples, you probably have more cards than you
really need. Pay off, then
cancel, all but a couple of the lowest-interest cards you have.
3
FIGURE OUT YOUR SAVINGS PLAN
The number one
question asked by couples in marriage and money seminars run by Stephen
Pybrum: Is it OK to have
joint and separate accounts? His
answer: Whatever you feel
comfortable with. There is no
universal plan for how a couple should save money for their future.
“The key to long-term savings is discussion, agreement and
arrangement,” says Pybrum, even in a ‘yours, mine and ours,’
scenario.
Karen, 32, a
director of a financial aid department, and her husband, Jim, 34, a
firefighter, have perfected a joint-plus-separate account plan. “We
have our own accounts with ATM cards,” explains Karen, “and then one
joint account without an ATM card because it’s strictly for savings.”
Both regularly put money into savings, and each feels responsible
for their shared future.
This practical
approach is admirable. Complicated,
time-consuming or inconvenient money management is doomed.
Automatic deposit of paychecks and regular transfers of an
agreed-upon amount to savings accounts will maximize savings and minimize
hassles. But sometimes one must
be secretive about savings. Erica
is planning Carlo’s surprise 30th birthday party.
“To save money, I made it look as though I’ve been paying off
credit cards, but the money has been going to the party.”
Except for surprise parties, then, communication is the key to
keeping money and marriage in sync.
Dollars
and Sense
Okay, so you
should talk about money. But
there’s talking and then there’s talking.
Here are the finer points of how and when to start the discussion.
TIMING
IS EVERYTHING. Don’t
discuss finances in front of others, during a favorite television program
or as your spouse is running out the door.
Choose a moment when you have time and your spouse’s attention.
SPEAK
THE LANGUAGE. Refrain
from blurting out, “Your broker is a moron!”
This will only trigger a defensive posture.
Attempt to resolve the issue by opening a dialogue.
For example say, “I’m not comfortable with Jack’s advice.”
STAY
TO THE SUBJECT. Money
chats can easily morph into heated arguments.
Keep the conversation focused on the financial topic at hand.
Bringing up past fights or unrelated problems won’t help, and can
only hurt.
EXPRESS
YOURSELF. If a money
issue is on your mind, don’t wait for your spouse to introduce the
topic.
HAVE
CONFIDENCE. Do
you feel intimidated by financial matters?
Buck up! Remember:
It’s your money, too, which automatically makes you a party to its
future. If you don’t feel
qualified, read up on money matters, and ask questions.
IT’S
OKAY TO DISAGREE. Not all
money issues need to be resolved immediately.
If you can’t figure out what to do, resolve to revisit the issue.
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