I read a great article yesterday from the Wall Street Journal: With This Debt, I Thee Wed. It discusses how finances, and specifically debt, can cause strife within a marriage, and how important it is to have a similar philosophy.
I just gonna put this out there: I love money. I love studying it, I love having it, I love budgeting it, I love reading about it. I own 4 books on personal finance, investing, etc. Because it's something I have such an interest in, it's become a central part of my relationship with Tom. When you combine that with weddings and moving out/starting a life together, money becomes a big factor.
We always tend to err on the side of caution, always spending less than more. This isn't to say that we're misers, because we certainly spend our money and have a good time with it, but we're careful to save and invest, always with the future in mind.
We have lots of honest, open conversations about money: how much we have now, how much we need, how much we want, etc. Because of all these conversations, we're completely on the same page in terms of saving, spending and investing. One thing that's really helped us has been setting concrete goals for where we want to be, not just "dreaming" about it. When planning the wedding budget, we figured out a rough estimate of what we'd need, then figured out how much a month we had to put aside for it. We're doing the same thing for a house --- we've figured out how much of a down payment we want, and we set aside a certain amount of money a month for it.
One book that's really helped is Dave Ramsey's Financial Peace, Revisited. While the book is really geared towards couples with debt, it did help teach us a few certain principles about money management. One of the biggest things he preaches is about savings. He advocates that every couple should have 4-6 months of living expenses saved as an "emergency fund." While that can quickly add up to a startling number, it makes a lot of sense (especially in this economy!). Once that is saved (assuming you have no credit card debt), you begin maxing out retirement savings, paying down mortgages (and other "good" debts), and investing your money in other places (stocks, child savings accounts, etc.).
I'm extremely glad that Tom and I began having conversations about money early on in our relationship. It's really saved us a lot of trouble, because now, as we really "combine" finances, we're finding it much easier. It's so exciting to see our savings build and our student loans go down. :-)
While we're not experts by any stretch of the imagination, here are a few things that have helped us:
- Being completely open and honest with each other. You can't make any headway when one partner is hiding something, and that's certainly no way to start a marriage.
- Being honest with ourselves. Don't kid yourself into thinking you can afford something if you can't. It gets you nowhere.
- Having fun. Just because you're saving money doesn't mean you don't have fun. Spend some, just not more than you have.
- Communicate constantly. Set up clear understandings of what it's okay to buy or not buy with consulting each other (say, purchases under $50 or under $100), and check in at certain times of the month (we like to do it on pay days!)
- Set goals. Figure out what you want to have/do in the future, and set financial goals accordingly (i.e. if you want a certain amount of money in savings, if you plan on buying a house, even if you plan on financing future children's educations --- it's never too early to starting thinking/planning/saving)
- Don't forget about retirement. The more money you save earlier, the better off you are. Compound interest is your friend. You don't have to have a company 401(k) to start saving, either. You can open a Roth at a variety of places and start saving as early as 18. Also, discuss when you both want to retire. Make sure you're on the same page (or at least understand the other person!)
- Get help. When you're really planning long term (retirement, IRAs, stocks, etc.) a good financial planner is worth the cost. Plus, having some accountability can't hurt either.
- Automatic savings are your friend. Payroll deductions have saved us some serious strife. We don't even have to think about setting the money aside --- it's already done for us.
- Set up separate savings accounts. We have separate savings, house, and travel accounts that help us keep track better. It's nice to know in 1 click where we stand.
- Think twice before you purchase anything major. Do you really need it, or do you just want it? Chances are it's probably a want.
- Live below your means. Just because you make a certain amount of money doesn't mean you have to spend that much.
- Figure out what works for you. I can preach until I'm blue in the face, but if you don't find a solution that works for you, nothing ever will.
- Relax. In the end, it's just money. Sure, it will make your life more comfortable, but having a savings account won't stop you from being miserable and unhappy.