For richer or poorer. That line is often included in the wedding vows that most people make. If the recent divorce statistics can be believed, that part of the vow does not always hold true. Money has always been a potentially explosive topic for married couples. This particular minefield is usually the number one reason why couples end up fighting or getting divorced. To prevent that from happening, it is prudent to exercise caution when making any financial decisions.
Here are five mistakes that married couples make when dealing with financial matters.
Pooling All Your Money In A Single Joint Account
One of the most sensitive topics that you have to deal with as a married couple is how to handle your disposable income. Most of the time, you won’t be making the same amount of money. This might make the person who is making less money feel insecure or defensive.
Most people combine their money to make things much easier. However, should you combine all your money into a single joint account? Quite frankly, the answer is no. You should always have several accounts, one for you, one for your spouse and a joint account. I talk a little more about this in my article about my marriage misconceptions. You should always have some autonomy over a percentage of what you make to spend it on whatever you want. There should be some things that you can buy without first asking permission from your spouse. Talk it over and agree on the amount you should set aside just for yourselves.
There seems to be a lot of confusion about point #1.. I am advocating a joint account.. just a separate account to put fun money in for each spouse. There is absolutely no need to have fun money in the joint account. All money goes into the joint account, then each spouse gets a monthly allowance for fun money in their personal account. This insures each spouse can have fun, but doesn’t mess up the joint account transactions or goals.
Running Up An Enormous Credit Card Bill
The first year of getting married can be expensive. You might have spent way too much on the wedding of your dreams. You might have also bought a new house or redecorated your place to reflect both of your styles. It can be so easy to run up thousands of dollars in debt just by using that credit card. This all coming from the credit card king 🙂
Debt and an uncontrollable spending habit is probably the most common issue that causes fights between couples. Most people will not see eye to eye when it comes to how much credit card debt is acceptable.
The problem with debt in a marriage is that you are now fiscally responsible for the debts that you incur as a married couple. That means you will also be held legally responsible for any credit card debt your spouse racks up. Even if you decide to keep separate finances, your spouse’s credit score is a consideration when you apply for joint credit. If your spouse has a low credit rating due to a high credit utilization ratio, then it will definitely affect your chances of getting approved for a joint loan.
Nagging About Spending
Couples usually have stereotypes when it comes to spending habits. One person is the spender while the other is known to be the saver, and never the two shall meet. The saver will keep on nitpicking on what the other spends, blaming that person for everything. The spender will also end up getting mad because the other person is being irrational. Studies have shown that most of the times there aren’t any spenders and savers. Each person just spends differently. When compared, most married couples will each spend the same. Often times, it will be the wife who will be buying household necessities and the husband buying the big ticket items. To avoid any arguments, just set a budget on how much each person is allowed to spend.
Keeping Money Secrets
Trust is an integral part of any marriage. Without trust, your marriage will be just full of suspicions about your spouse’s activities. It will just cause your relationship to quickly fall apart. One of the worst offences that can break the trust in any marriage is to keep money secrets. This would range from hidden banks accounts, to credit cards that your spouse does not know about, to debt problems that have escalated. In some extreme cases, you might not even be aware that your spouse has taken out a second mortgage on your home or wiped out your joint bank account. These secrets can definitely break your trust in one another and may be hard to repair.
Failing To Set Aside Emergency Money
You are both young, earn a good living, and are relatively healthy. Your main goal is to enjoy your new life as a married couple. You can always save later once you decide to have kids. However, life is unpredictable. The economy might tank, your spouse might lose his job, or an accident might happen. You should always save for a rainy day because you never known when you will need it.
Have you made any financial mistakes as a couple? How did you recover? What other financial mistakes do you think couples should avoid?