What Challenges to Personal Financial Planning Does Marriage Present?
Many young couples just starting out do not have large amounts of savings accumulated, and may not be earning much more than enough to cover basic monthly expenses. These factors combine to put stress on a new marriage, because poor financial planning can result in a month-by-month struggle to pay bills and cause conflict over priorities.
Other People Are Reading
-
Combining Bank Accounts
-
Many married couples open up joint checking, savings or investment accounts. Having two people access the same account means that they both have to be careful about what they spend and post all expenditures promptly to the checkbook register. The use of debit cards or ATM cards makes this even more challenging because the number of monthly transactions is typically higher than it would have been when everything was handled with paper checks.
Budgeting
-
For a married couple, budgeting is a matter of adding up the fixed costs of living each month -- things like housing costs, car payments and insurance -- and then calculating how much they have for discretionary purchases and for savings when their combined incomes are taken into account. Budgeting often results in friction because each individual may have a different idea of what is most important to spend in order to have the most enjoyable, fulfilling life possible. The ability to calmly discuss budget issues, hear the other person's side, and be willing to compromise is essential.
-
Investment Philosophy
-
Putting surplus cash to work in investments is the best way to build long-term wealth. Investing in stocks, studies have shown, provide more attractive long-range returns on your money -- a healthy average of more than 10 percent annually over the last six decades -- than choices such as bank savings accounts or certificates of deposit. But each spouse's attitude toward risk must be taken into account when making investment choices. One may be willing to forego trying to earn high returns because he cannot accept the risk of loss that comes with stocks. Riskier investments can keep an individual up at night worrying during times of stock market turbulence. Again, discussion and compromise are needed. Each half of the couple must agree how their joint funds will be invested.
Major Purchases
-
For everyone except the most affluent couples, making major purchases means going into debt. When debt levels grow too high for the couple to easily make the required payments each month, it can add to financial stress. If the couple starts being late on payments it can cause serious damage to each person's credit rating. Prudent financial planning may require the couple to postpone a major purchase until they have built up a bigger savings cushion to protect their financial standing in the event of a setback such as one of them becoming unemployed.
Allocation of Responsibility
-
All the elements of a couple's financial life -- bill paying, balancing bank accounts, monitoring investments, keeping records for income tax preparation -- require time and dedication. One person may become resentful if she has to do all of these financial and record keeping chores. A practical solution is to divide up the responsibility for each part of their financial life -- but keep the other person informed about issues or problems that they need to discuss to keep their finances on track toward their goals.
-
