As many of you know, Bo is getting married in less than two months, so his upcoming wedding has been a hot and heavy topic around our office. We feel that Bo is a little naive about marriage and financial expectations, so picking on him has provided a lot of entertainment for the rest of us lately.
In today’s show, we thought we would let you guys in on the fun and talk about the biggest financial mistakes couples make as well as some of the financial benefits that come along with marriage.
Some quick facts about marriage:
– The average engagement time: 13.8 months according to WeddingChannel.com and 15.4 months according to TheKnot.com
– Average wedding cost: $26,500 in 2011 according to Brides magazine
– Average net worth for married couples in 2004: $144,500
– For single males: $28,100
– For single females: $30,026
6 Financial Benefits of Marriage from MSN Money:
- Save money on car insurance
- Raise your credit score (if you enter a marriage with someone who has a higher score than you do)
- Get favorable loan offers
- Increase financial stability (due to having more than one income)
- Combine expenses
- Share employer benefits
The Six Financial Mistakes Couples Make according to smartmoney.com:
- Merging the finances: Everybody is different. While some couples prefer joining everything, some prefer to keep everything separate, and others have found success by doing a hybrid of the two. Before entering a marriage commitment, decide what it best for you and your future spouse.
- Dealng with debt: Rather than pointing fingers at the one who accumulated student loans, a mortgage, etc., work to develop a plan to tackle it together as a couple.
- Keeping spending in check: Be realistic and develop a budget to ensure that each person is comfortable with the spending arrangement. One spouse may spend more on day-to-day items, while the other likes to splurge on electronics and hobbies.
- Investing wisely: Statistically, men are more willing to take financial risk than their wives. Rather than fighting about it, become educated together about the appropriate amount of risk tolerance for your goals and time frame.
- Keeping money secrets: Cheating in a marriage does not only apply to sexual fidelity – it can also apply to financial fidelity. This survey showed that 36% of men and 40% of women have at one point lied about the price of a purchase. You also commonly hear about couples hiding money from each other is secret accounts. The best way to avoid fighting about finances is to always be completely honest and transparent with your spouse.
- Emergency planning: This is a core concept of financial planning and one of the first things you should establish together as a couple. Having these funds as a back up will eliminate a lot of the stress that leads to fights about money.
Additional tips for a happy marriage:
- Disclose your assets to each other
- Disclose your debts to one another
- Set joint financial goals – how much to save, when to retire
- Develop a full financial plan – insurance needs, estate needs, retirement goals
- Create a budget
- Decide who is going to manage the finances day to day
- Set up a time to review your budget each month or each quarter
- Develop a method to organize your personal documents and retain financial information for your taxes
- Update your insurance policies and beneficiary designations on all accounts
To sum it up, marriage can be one of the most challenging, but rewarding experiences you will ever have. Do not let financial matters be the thing that comes between you and the one you love. Always try to treat one another with respect and be honest and you can certainly make it last. Please join us (all joking aside) in wishing Bo and his future wife happiness and a long, loving life together. He also welcomes any additional marriage advice you may have, so you can write to him below, send him an email at [email protected] or post on our Facebook wall!
Great info guys! This is a topic that’s near and dear to us. We use to fight a lot about money. The key for the turn around was managing money TOGETHER. In our opinion all financial decisions should be made together in a marriage. I don’t want to hi-jack Brian’s blog, but if you don’t mind sharing our blog post, here’s more on our views: http://keithandkinsey.wordpress.com/2012/03/20/marriage-and-money-dave-ramsey-vs-suze-orman/
Great show. I remember one of the best financial things about getting married was the sudden influx of money. I was used to just my salary and now there was TWICE as much money coming in! It was awesome. I’m very glad we didn’t get carried away and start spending it all. We never kept a specific budget, but we did track where money went and I would produce a net worth statement each year. As with all investing, it starts out slow, but after 8-10 years you wake up one day and realize “Hey, it’s really working.” Then you reach the point, like Brian said, where there are enough assets that you don’t have to budget for every little thing any more. As long as you continue to save enough, what you do with the rest is kind of irrelevant. You reach the point where money issues don’t keep you up at night, and that is once of the best feelings you can imagine.
Two financial things I would recommend to young couples that I don’t think you touched on.
1 – Get a basic will made up. No one wants to think about dying right after they get married, but spending an evening with a lawyer and getting a basic will drawn up will save the survivor a lot of headaches should the worst happen. You might also want to consider a living will/healthcare power of attorney since statistically, you are actually more likely to be seriously injured or disabled than you are to be killed. Make sure to update them if children come along.
2 – On a related note, get some life insurance. If one of you were to pass away, there may not be enough assets early on to keep paying the bills and the survivor might not be able to, or want to, go back to work right away. Having that cushion provides great peace of mind. Also, insurance is dirt cheap for healthy, young people. Again, make sure to check there is enough insurance once children need to be provided for.
We’ve been married for 20 years and, like all marriages, there have been ups and downs, but overall, if you marry the right person for you, it is the most amazing and satisfying way to spend your life. Knowing there is someone out there who loves you unconditionally and will always be there for you to help you through anything that comes along and to share all the joys in both your lives is a very, very wonderful feeling and can make you feel stronger and more secure as a person because you know there is someone out there who will always take care of you. And you get to wake up next to this person every morning and think “I can’t believe I get to spend my life with my best friend.” You spend enough time with someone and it gets easy to start taking each other for granted and to not continue to show the love, respect and caring that brought you together, but you have to fight it and work to keep those early sparks alive. It keeps you feeling young and reminds you why you got married in the first place. When they speak of marriage being hard, I think this is one of the key things. Don’t let the day-to-day routine of life make you stop thinking and caring about each other. Keep doing little things for each other to make the other one smile and show them you care.
Being married really is an awesome feeling, and I wouldn’t trade it for anything.
Congratulations and best wishes to you, Bo.