Protect Your Pockets Series
Money Management "I Dos" and Don'ts for Newlyweds
by Indiana Secretary of State Todd Rokita
After an engagement, the thrill of wedding planning, honeymoon arrangements and, frequently, moving logistics occupy much of a happy couple’s time. However, in the midst of debates over flowers, music and menus, many future spouses neglect to discuss one truly important thing: their financial history and habits.
In many households, newlyweds often learn about their spouses' debt or lack of planning for the future after the knot has been tied and the last wedding gift has been opened. When couples get married, not only are they merging their families, but usually also their bank accounts, credit histories and outstanding balances.
Even the most well-matched pair may find that they have vastly different attitudes and experiences with spending and saving habits. Some people are innate savers, investing and living on a budget. Others are spenders that purchase without planning and may run their personal checking account into the red every month. Assuming a partner is financially compatible can be a recipe for disaster.
Larry Burkett, a noted financial author, said, "Money is either the best or the worst area of communication in marriage."
True, finances may be difficult to discuss, but we can help. My office’s investor education program, Indiana Investment Watch, recently released a second edition of our free guide, "Money Skills for Newlywed Couples.”
For many couples, financial discussions aren’t easy because money can symbolize different things to each partner such as security or power. If topics like debt, bills, savings and goals make one or both of you uncomfortable or defensive, seek the help of a financial counselor or planner. It is important that husband and wife both know where they stand financially and have common financial goals.
In taking a spouse, you’re not only getting a romantic companion, but a business partner with a 50 percent share in the future happiness and stability of your household. Communication and planning are both key to a good financial working relationship with your husband or wife.
One way to achieve this goal is to develop a spending plan for your family – before you tie the knot. These can be simple or innovative depending on what you determine will work best for you as a couple. One expert even suggests considering a “three-pot system,” as opposed to the traditional shared bank account. In this plan, each partner maintains his or her own separate account after a portion of their earnings is pooled into a joint account used for bills, living expenses, household purchases and entertainment. Not only does this allow for even financial footing in the relationship, if one partner splurges on a new pair of shoes or video game from their personal account, they only have to answer to themselves.
My ultimate hope is that couples will take the critical step of discussing finances before it becomes an issue. This can lead to more stable and secure Hoosier families.
Related Information:
- Download Money Skills for Newlywed Couples brochure