You floated down the aisle on your wedding day. Everyone can see that you two are ecstatically in love, and didn’t those famous mop tops say that’s all you need?
But you might as well be in love and be financially sound, right? Statistics say financial worries cause the most arguments within a marriage. Instead of bickering down the road, sort your financial concerns ahead of time, so you can live on love. Plan for the major milestones in your life together. Having a direction for your financial goals keeps you on track, leaving little room for surprises along the way.
Take Stock
Know yourself and know your spouse. In a relationship, there is usually one splurger and one saver. Whichever you are, trying to change your new spouse probably won’t work. Instead, concentrate on managing those tendencies. Use a system of checks and balances to ensure both of you are continually on the same page. Going through a monthly account of all your purchases together will keep you updated on each other’s spending methods and make you aware of any opportunity for change. Make a concerted effort to break your own bad habits. We all know there is room for improvement of our shopping ways. Shopping when sad, like grocery shopping when hungry, is a bad idea! Or if you have friends who are a bad influence when at the mall, decline the invitation to go out. You will either spend money you should not or resent the fact that you can’t.
As in every other aspect of marriage, having a frank and open discussion regarding money is important. William Santor, a financial planner with Snelson Santor and Associates in Mississauga, Ontario, says “Knowing what is important about money to each other will help you make smart decisions about money together.” According to Santor many people attach “values to money, such as security, freedom or the ability to help others.” Figuring out what money means to each of you will keep you on track and correctly informed about each other’s feelings. There are emotional issues attached to money: one might interpret as irresponsible or inconsiderate blowing thousands of dollars on a TV or stereo system. Being aware of the value you and your spouse place on your financial situation can eliminate, or at least manage, potential problems.
Write Down Goals
Knowing what you want, and when you want it, helps your financial planner get a sense of the plans you have as a couple. Even after you’ve started the process, keep your list handy as a reminder of goals you have agreed upon together. A new Plasma TV or better yet, a gorgeous pair of Jimmy Choos, can steer you off track. It’s time to think delayed gratification. The great Benjamin Franklin said it all when he said, “A penny saved is a penny earned.”
Debt reduction is the biggest problem among couples today, and taking on your new spouse’s issues may not help with harmony in the home. Debt service ratio is the percentage of your earnings that you can spend to service your debt each month. The debt service ratio is 40 percent of your income. If you are taking on major debt from your partner, keep this figure in mind as you structure your finances. The best way to work down your debt is by factoring it into your monthly expenses. Waiting for a big windfall of money, or saving up to make a large, lump sum, will only make it easier to postpone paying, and harder to lower your debt.
Have A Plan
Choosing a financial planner is a big step. Many banks offer these services, and there are private firms as well. To find a good financial planner, consult family members or valued friends to point you towards a trustworthy professional. It is important to find someone you can count on to handle your finances, since he or she will be guiding you in some of the most important decisions of your life.
The biggest stress concerning money is the unknown. Living from month to month without knowing how much you really have, or how you are going to get more, causes an added strain on your marriage, along with everything else! By having a well-constructed financial plan, you can alleviate this pressure. If you are cognizant of how much you have and what you are working towards, handling your finances won’t be as scary or seem like such a strain.
Envisioning a gorgeous Spanish-tiled kitchen or imagining the perfect whirlpool tub in your designer bathroom? The major desire of any newlywed couple is the purchase of their dream home. You may be starting off your life together in a fantastic basement apartment, but you are probably longing for a place to call your very own. Canada Mortgage and Housing Corporation is making it easy for first-time buyers to purchase a home for themselves by requiring only five percent down. Have your financial adviser break down your current financial situation. He or she will be able to show you exactly what you can afford with the money you have available. Look at what you bring in and be realistic about the sacrifices you are willing to make. This may mean taking a bag lunch to save a few bucks. Eating out at five dollars a day may not seem like much, but multiply that for every day of the week times 52 weeks, and that’s $1,200. Mr. Franklin was correct in saying, “Beware of little expenses: a small leak will sink a great ship.”
Don’t Rush Yourselves
Be cautious of jumping into a money-saving venture before you are ready. “There is a lot of financial planning by slogans,” says Scott Reynolds, a certified financial planner with Jones, DesLauriers and Reynolds Financial Services Group in Toronto. “One-liners like ‘Max out your RRSP’ or ‘Start as early as you can.’ But if a young couple is struggling to make ends meet, an RRSP is probably not the right financial tool.” An RRSP stands for Registered Retirement Savings Plan. It is a government-sponsored investment vehicle that allows people to shelter a certain amount of money from the “taxman” each year, as if you never earned it in that tax year. The money accumulates tax-free as well. “The design is to allow that money to grow and capitalize over a longer period of time and then spend that money having had the growth impact of no taxation,” Reynolds says. Though, one day you will have to pay taxes, whether by cashing in those RRSPs or receiving payments from them—there are no free lunches! So discuss with your planner options that may better suit your particular newlywed financial status.
Financial worries can take over your life. When you are concentrating on paying the bills and wondering how you will get ahead of the game, you can lose focus on enjoying your life together. By having a manageable plan for your money, you can put those worries on the back burner and have fun, while working towards a happy, healthy financial future together.
