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:
The book Till Debt Do Us Part by Bernard E. Poduska is another valuable resource.
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.