Print Posted on 02/07/2017 in Financial Planning

Financial Planning For Married Couples

Financial Planning For Married Couples

Financial planning for married couples isn’t something that can go on the back burner for too long. Because if you and your spouse wait to have important discussions about your money, there’s sure to be problems on the horizon. For example, say a woman comes into a marriage with $40,000 in credit card debt. But she’s too ashamed to tell her husband. Then the husband finds a statement in the mail with their debt balance, and it leads to a big fight. Now there’s not only stress about how they’re going to pay for it, but also concerns about why she hid it from him in the first place. Secrecy in a marriage is never a good recipe, including your finances. Or say you have a situation where one partner is consciously working hard and saving money while the other is spending frivolously. These two can butt heads over their financial goals and there will be constant resentment in the marriage. That resentment can ultimately lead to a divorce if there’s no compromise. And divorces are extremely painful and expensive. These two examples aren’t uncommon or far-fetched. So it’s not hard to believe that money problems are one of the causes of the high divorce rate in society today. However, couples that do take care of their finances and establish a plan going forward have a completely different marriage. Their financial goals unite the couple and bring them closer together. So how does a married couple go about taking these positive financial steps? Follow these three financial planning steps for married couples.

Financial Planning Steps For Married Couples

Step 1: Have Honest Money Conversations

Just as communication is the key to success in marriage, it’s also vital to a couple’s finances. So scheduling a time to sit down with your man or woman to have an honest conversation about money will accomplish wonders. First, you both need to come to the table with all of your assets and debts. Specifically get into the details about how much you each make, how much are your assets worth, and how much debt do you have. This is the first step, because it’s difficult to know where you’re going if you don’t know where you’re starting from. And Step 2 and Step 3 will be impossible to accomplish without accurate information.

Step 2: Define Financial Goals

Then, once you have a clear financial picture with your spouse, move on to define your financial goals. The best way to do that is to consider the future and come up with a plan. These might be some questions you address:

  • Do you want to buy a home and where?
  • When do you need or want to pay off all the debt?
  • Want children? How many? When?
  • Will the kids go to public or private school? Are you going to pay for their college?
  • How much money do you need saved up for retirement?

By discussing and compromising as a team, you lay the foundation for a healthier marriage and financial peace. Together, come up with a rough plan about how you’re going to reach these goals. In other words, how much money do you two need coming in or saved up by when. If you both want a baby but can’t afford it, then maybe you decide to wait a year or two until you’re in a better financial place. If you want to retire on a beach house in Florida by age 60, analyze the costs and what actions you need to take to get there. It’s also helpful to discuss who is going to be responsible for doing the work to accomplish your financial goals. Come to an agreement about who is working full-time, paying the bills, and doing the investing for retirement. Giving each partner a role adds to the team culture that you’re both working towards your future goals. And don’t stop with one or two conversations about your financial goals. Make it a routine to stick with it by discussing how you’re doing financially on the first Sunday of each month, for example. This prevents a breakdown of communication in the future.

Step 3: Consider Hiring A Financial Planner

Although having honest money conversations and discussing financial goals are both great for a marriage, there’s a difference between having goals and achieving them. For example, investing money is great, but not if you’re making investing mistakes that cost you money. And what do you do if you can’t ever seem to agree on a few financial goals? You don’t want that to put a divide between you two. Or maybe you do know how to execute your goals and you both agree on them, but then life happens and throws a wrench in your financial plans. That could mean one of you loses your job, or gets injured and are unable to work. These are all reasons, among countless others, why a financial planner can help you two with your finances. A financial planner will work to understand your situation and then present you with specific action steps to reach your financial goals. They can advise you on the best investments given your retirement goals and timeline. They can use their professional expertise to act as the intermediary in solving financial disagreements. Or present solutions you two haven’t thought about where you both can agree to compromise. And a financial planner can advise you about insurance or other protection for your future. Maybe you don’t consider having to financially support your parents or how you’re going to stay afloat if the stock market goes down 20% when you’re closing in on retirement. If you’re not knowledgeable enough or don’t have the time to manage your finances, seeking a professional’s input can be a great idea to ensure you two reach your financial goals. Ultimately, a married couple working together (maybe with a financial planner) are better off than two individuals in a marriage who don’t communicate and don’t have financial goals. Related: Financial Planning For Millennials