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Are you always fighting over money? Are you lacking a true financial partnership with your spouse or significant other? According to statistics, stress caused by financial problems is one of the main reasons why so many people get divorced. If you're unable to create harmony when it comes to marriage and money, your marriage is bound to fail. Once you're married, your personal goals are no longer just "your own". Whether your marriage is going to be successful or not, it will most likely depend on your financial honesty with your spouse. After marriage, you also need to learn to value the opinion of your significant other in your financial matters. Remember, you don't have to be a Certified Financial Planner to express your opinion on financial issues, sometime your gut feelings can get you out of financial trouble instead of expert advise. If you're committed to make your financial lives better, here are some of the important things to keep in mind.
Determine Your Long-term Financial Goals
Easier said than done. Some people will question why do they need to set joint financial goals. Some people are too independent when it comes to financial matters and they want to keep it that way. However, once married, you need to realign your goals with the realty of living together and sharing financial responsibilities. Most couples find that while the process of setting financial goals can be challenging, it can also bring them closer and help reduce tension over money. Sharing goals and dreams is generally a necessary first step towards figuring out exactly what it is that you want as a couple. If you have lived together before getting married, you probably have a fairly good understanding of your partner financial habits. So setting up some joint goals should not cause issues unless you managed your financial lives secretly while living together.
While setting goals, you may find it helpful to set separate goals across different time horizons, either as a tool to spur discussion or to clarify what you're shooting for and when. As you may have figured it out, setting goals on day one is not the purpose of this exercise but rather open a discussion with your partner to understand their own aspirations and figure out any known issues such as prior credit card debt, that need to be resolved early on in your marriage.
Discuss Short-term Financial Goals
These may be short term financial goals that you may want to achieve in the next 12 months, like reducing credit card debt or saving for a trip. This may be a good time to discuss your first big purchase such a buying a home if you haven't already done that. Planning a family budget should be one of the items that should be top priority as a short term goal as well. You may or may not have a two-income household, but having a clear understanding of your monthly cash outflow will be a big help. If you have unpaid bills or debt prior to marriage, sit down and discuss them to make sure both of you have a clear plan to take care of them. One of the very interesting issues in marriage is income disparity. One spouse may earn as much as twice as compared to other partner and this may cause lot of friction and trouble later if not addressed in the initial planning. It may be a very good idea to divide household bills or monthly expenses based on the earned income. For example, if your monthly expenses are $2,500 and one spouse earns $50,000 while other only earns $30,000, monthly expenses should be divided as $1,500 and $1,000, in line with income. This may sound odd to the spirit of equal partnership in marriage but this is what will help you get along in long term and eliminate any resentment.
Compare Medium-term Financial Goals
These may be things you would like to achieve in the next 5 years, like paying off student loans or going back to college to get a degree. Make sure both partners agree on a plan like this because this would take significant time and resources and may end up being a burden on the family and a big cause for distress for the other partner.
Share Long-term Financial Goals:
These are things that you may want to achieve in the next 5 to 20 years, like buying a bigger house, or retiring early. If you plan to have children, paying for their college education is another item that should be considered in your long term financial plans. Also, if you would like to have certain goals accomplished in next 20 years, make sure you have a buy-in from your partner otherwise you are setting yourself up for a huge disappointment at a later stage in your marriage.
Other Action Items to Consider
To achieve your financial goals, you need to develop a comprehensive financial strategy that will involve your jobs and benefits, a sound emergency plan and getting prepared for unfortunate events such as death of a spouse. It may sound odd to discuss and prepare for an event such as loss of a spouse but if you have to discuss it with someone there is no better person than your own spouse. Remember, It os not going to be your relatives or friends but having a well prepared financial plan is the only thing that will save the day and your family in case something unfortunate happens.
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