Money When You Are Young and In Love
Eight Financial Planning Exercises Our Marriage Counselors Should Have Made Us Do
I married my husband about a year after college. At 23 and 24, we were naïve about many things. Money was one. While we did receive marriage counseling, the experience was downright abysmal. So bad, in fact, that we quit one counselor because he was convinced I cared more about the wedding flowers than the marriage. Actually, I wanted nothing more than a fuss-free elopement, but that didn’t fit into his view of women.
Our second round of counseling was from a couple at our church. I forget what all they covered, but it was a very Sunday school format, heavy on the roles of husband versus wife and what was right and wrong behavior. I think they briefly touched on money management one week, but there was no in-depth coverage of our financial situations or our financial expectations. All of that was left as a stunning surprise for the marriage itself. It’s a wonder our relationship survived.
If our counselors had been a little more worldly, they might have had us work through a few concrete exercises. In case any of you out there are currently exploring marriage or giving marriage advice to others, here are the exercises that I wish we had been asked to do during our engagement.
- Spending Styles and Expectations
Without using Google, write down how much you would be willing to spend on the following:
a. a week’s worth of groceries
b. a meal out
c. a pair of jeans
d. a car
Had we completed this exercise, we would have found out that I spent much less than my husband on the day to day things, but was far more willing to shell out for quality on items like a car.
At that point in my life, I bought hardly any clothes new. My husband, on the other hand, couldn’t understand why I expected him to get jeans from the thrift store. “Those are already worn out!” he would tell me. “Not all of them!” I would reply.
Answering this question isn’t about right or wrong. It’s about spending styles and priorities. You don’t need to agree on these. You just have to understand your spouse’s rationale.
One more tip — if one of the partners can’t give any estimate without consulting their phone, they probably are not great with managing their money.
2. Bills and Payment History
Make a list of all the bills that are in your name, and check to see how often they have been past due in the last year. Share this with your partner. Include in this list ALL debt you have, including loans currently deferred.
Since both of us had been working jobs and living in non-student housing, I had assumed my husband had been paying bills in his name. Turns out, he did not. His phone had been with his parents. His rent and electricity through one of the other roommates. The first time I asked him to set up a utility account and figure out the billing, he froze. It wasn’t until later that he told me the endless delays and missed payments were because he had never paid bills before. He had just handed over cash to his friends and family when they asked for it. There’s a huge difference. Also, he didn’t have a credit score.
I took over handling the finances after the first few months. He slowly learned the ropes and ended up handling the finances years later when we had our first kid and I had too much on my mind. His credit score is now better than mine.
No one starts married life with all their ducks in a row. But it’s helpful if you know whether someone has any experience managing ducks, and which ducks are currently on the loose.
3. Current Spending Habits
Write out your current monthly spending and current earnings. Not your future, married couple budget. Not your current, individual budget. Write down what you actually spent over the last three months, by category. Then compare your two lists.
Doing this would have shown things like both our cars were old and one was a lemon, one of us spent a lot at McDonald's, one of us spent a lot of money on art supplies that only occasionally got used.
We also would have realized that since my husband had not been paying rent where he was living, it wouldn’t feel like moving in together was saving money. (For those wondering: He had a work for rent arrangement for an elderly couple, but there was no cash involved.)
4. Money Goals
Write out any goals you have that will require money. Then rank them by priority.
For instance, we each wanted to visit the country the other had grown up in. We wanted to live overseas at some point. We had a bunch of medical debt that needed to be paid off. We also had student loan debt. And as mentioned above, rather junky old vehicles that needed to be repaired or replaced.
What comes first for you? Paying off debt or traveling overseas? Or do you have other ways of setting that question up? Maybe you could reward yourself for two years of good debt payments with a trip overseas.
There are all sorts of ways to handle this. I can’t tell you the best one for beginners since we didn’t do any of them. Since then, we have learned to set concrete goals. For instance, we split bonus payments into 80% toward debt, and 10% for each of us to spend or put toward fun goals. That keeps us motivated and on track.
5. Joint Budget
Only when you have done all of the above, create your joint couple budget.
Most couples make a budget. We made a budget. But ours was a budget from thin air, unconnected to our habits or our values. It never lasted.
We would keep a budget for a month or two, then throw our hands up in the air as it got derailed. Our spending would slide off the tracks for a few more months. Then I would make a desperate attempt to pull it back into line. It was miserable.
Once we started budgeting based on our actual, realistic spending habits, things improved exponentially. We don’t have to reference our budget nearly as often either. The amount of energy that we spend on our money management has been substantially reduced.
6. Checking and Saving Accounts
Have a real talk about how the money will merge.
Given the Sunday-school-like inclinations of our counselors, the only option presented was fully joined checking and savings accounts. We have certainly had years when fully joint checking accounts made the most sense — I supported him through finishing his bachelor’s degree, then he supported me through finishing my master’s degree and again through a period after giving birth to our son. But when we are both working, it works better for us to have separate spending accounts for incidentals. We always keep a joint account for things like rent, utilities, childcare, etc.
I know some couples who keep the vast majority of their money separate and split the bills. I know of other couples where one partner handles their pooled resources and commitments, and issues the other an allowance, either in cash or to a separate checking account. That second option might sound mean, but it can keep a spouse from derailing the family finances. It is particularly appropriate if one partner goes through manic mood swings or ADHD fueled spending spurts. The point is to figure out what will work for you and your partner.
I do recommend you always keep separate savings accounts for your own goals. For instance, my husband likes fancy camera equipment. So when he gets a birthday check from his grandmother, that can go into his savings account until he has enough to get the next nice lens. I tend to only buy clothes twice a year. So I can move my clothing allotment over to my savings account and then have it on hand when the sales hit, without fearing that it will accidentally get spent on something else.
7. The Sort of PreNup
Talk about financial deal breakers.
You and your partner can manage your money however you like. But you need to be keeping each other in the loop. Hidden credit cards are out of bounds. Locking your spouse out of your joint checking account by changing and hiding the passwords — also out of bounds. If you feel the need to do that because they are overspending, then both of you need professional help for your relationship to survive.
Other financial things that can tank a relationship: using your partner’s SSN to get a loan for yourself, listing joint assets as collateral without your partner’s enthusiastic consent, siphoning money out of joint accounts into your own spending, or scamming your partner in any way.
My husband is now a banking manager, and he will tell you that financial abuse is real and unfortunately common. We had the misery of watching one of our friends get scammed by her husband prior to their divorce. And we’ve seen it go the other way too: a wife ran out on her husband and maxed all the credit cards out before disappearing. Never let things get to that point. Be upfront before you begin your partnership about financial behaviors that will cause you to leave.
8. Earning Expectations
Independent of each other, write down what you expect to be making in five years and in twenty years, and what you expect your partner to be making in five years and in twenty years.
Second: Write down how you expect care for any eventual children to work out. Do you assume your partner will take time off of their career? Or support you in taking time off? Write down whose career you expect will take back seat if someone’s has to.
Third: Write down how many hours a week you feel like your partner ought to work. Set a range. Thirty to forty hours. Forty to fifty hours.
Compare notes. Fight about it.
These are the all too often unspoken expectations that can cause resentment down the road. So have your arguments about them now.
Then agree that you can’t see into the future, you can’t and shouldn’t control your spouse’s earnings, and you don’t know what childcare will look like until you are in the middle of it.
A good marriage will flex with the circumstances. A good partner will help you reach your own goals as much as is within their power. Do I need to say that you also need to be a good partner and help your spouse with their career and wealth goals? Agree to support your partner and never hold them back.
And finally…
I am not a financial planner. I am just a wife who has had nine years of ups and downs in a rather ordinary marriage. I would say to run all this advice by a financial planner, but I know my twenty-three-year-old self would never have done that. I thought financial planners were someone you consulted about retirement when you were forty. So I won’t say consult a financial planner. I will say, go over your financial stuff with someone older and wiser and further down the road of life.
You may also find it helpful to sign up for a money management class as a couple. My husband and I did a Dave Ramsey class a few years into our marriage. I don’t like Dave Ramsey, but working through the class exercises and homework really did get us on the same page.
Above all, talk about money before you get married. Then when you are married, keep the conversation going.