Young
married life should be a joyful time, but conflict over money often interferes.
For newlyweds under the age of 30, debt brought into the marriage is the number
one cause of conflict. To avoid the unhappiness and divorce this conflict can
cause, newly married and engaged couples should take steps to minimize money conflict
and maximize money harmony in their relationships.
Crushing
Financial Burdens -- A Pervasive Problem
American
couples live in a financially stressful environment. At every turn they hear or
see advertisements to purchase on credit. Tempting credit card offers with
generous credit limits arrive in the mail almost daily. Over the last decade or
so, household consumer debt has doubled, from $1 trillion to $2 trillion and
bankruptcies have risen to record levels. Behind the statistics are millions of
individual lives and marriages under enormous financial pressure.
Four
Principles to Adjust Your Money Attitude
Couples have the best chance of getting their financial
house in order if they first adjust their attitude. The researchers say four
principles can transform your thinking toward a harmonious financial
relationship with your spouse.
Principle
One: Value your spouse above money. Love and good will toward one another must infuse
all efforts to unify your financial life. Remember that you are married to each
other, not to your checkbooks. When each of you feels loved enough to be
emotionally safe, then you can communicate openly, honestly, and
compassionately about money matters.
Principle
Two: Be willing to grow. It's important that each of you discover your money
personality and then be willing to adjust it so you can achieve harmony and meet
your financial goals. Money personality refers to your attitudes and behavioral
tendencies toward money. Financial problems are typically behavior problems
connected with emotions, attitudes, and habits learned from our experience and
family of origin.
Principle
Three: Share your vision. Explore together your core values and deepest
desires for the kind of life you want for yourself and your children. How many
children do you want? Do you want to invest time and money in music instruments
and lessons, athletics, art, involvement in civic affairs? Do you want more
time for family or more for professional achievement? As you explore each
other's values, begin to develop a shared vision that unites you as a couple
and directs your future financial plans. Envision money as a means to help you achieve
your shared goals - and thus as a tool to enhance your marriage.
Principle
Four: Decide to live well, not high. Develop a non-materialistic attitude that values
living well rather than living high. Living high is characterized by conspicuous
consumption. Living well is characterized by altruism, service, work,
self-reliance, and consecration. When we live well, we view our life and
resources as stewardships.
Learn
Financial Skills
Once
you've adjusted your money attitudes, you're ready to build your financial
skills. Three foundational skills are discussed here.
Live
Within Your Means with a Values-Based Spending Plan
To
develop a spending plan to live within your means, create a simple monthly
budget that tracks all income and expenses for a month. Determine whether your monthly
income less expenses is a positive number and do the same for your yearly
budget. If expenses are greater than income, then together consider sacrifices you
might make and creative options to reduce expenses or increase income. Remember
that income must exceed outgo. Counsel with each other and with parents,
ecclesiastical leaders, and university outreach financial counseling clinics
until you have a clear plan that works. Periodically review your spending plan to
see whether your budget moves you toward your most valued life goals.
Earn
Interest; Don't Pay Interest
Reducing debt reduces marital stress and increases financial harmony
and strength. Therefore a debt elimination plan is an important part of every
couple's quest for financial harmony.
The "fold-down" method may be the simplest and most powerful debt
elimination strategy available. It works as follows: Make payments on all your
debts, and when one debt is fully paid, apply the payment you were making to the
now-paid debt to another debt. This increase in payment will pay off the second
debt more quickly. Continue the process until all debts are paid in full. This technique
can eliminate debt in less than half the time it takes to pay off debt by making
minimum payments.
Develop a debt-averse attitude and a deliberate desire to avoid paying interest. Only
use a credit card if you pay off the total balance every month. Remember the
folk proverb about paying interest and you will be motivated: "Interest: Those
who understand it earn it. Those who do not, pay it."
Save
and Invest
It's
important to save and invest. It's also important to have emergency savings. Therefore
we recommend that you first establish an emergency fund equal to at least three
months of your family expenses. Also make sure you have an emergency supply of non-perishable
food, water, and other essentials.
Once
your emergency savings and supplies are in place, invest 10%-20% of your monthly
income in a 401K retirement plan or in a traditional or Roth Individual
Retirement Account. Information about these plans is available on the Internet
and at university financial counseling clinics.
Get
Financially Educated
A
good source of information is personal finance classes at local community
colleges or from university outreach extension services. The Internet can also
be a good source, including the following websites:
- Money.com
- Kiplinger.com
- SmartMoney.com
- Quicken.com
- YahooFinance.com
- MSNMoneyCentral.com
The
book Till Debt Do Us Part by Bernard E. Poduska is another valuable
resource.
Conclusion
Applying
the principles of sound financial management is a critical life skill. Married
couples who do this can work their way to money harmony and a stable financial
future. Engaged couples who begin applying these principles now can have those
same benefits and a smoother financial transition to marriage. Single
individuals, too, will establish habits that will bring strength and peace to
their lives.
Written
by Todd Martin, Certified Financial Planner, and edited by Stephen F. Duncan,
Professor, School of Family Life, Brigham Young University.