Money is very personal. Most planners say the key to financial marital bliss is being able to have an honest conversation about expectations and goals. Putting that philosophy into practice it can be difficult.
“Being a financial planner does not immunize me from marital financial disagreements,” says Brett Walters, a certified financial planner at Trident Financial Planning in Lakewood, Colorado. “What helped my wife and I resolve some of the conflict was an understanding of each other’s background and attitude toward money.”
Learn perspective. Walters says his wife’s family experienced a difficult financial situation after her parents’ divorced, which resulted in her mother, two siblings and her moving in with their grandparents for several years while she was child. “Though it took some time for me to realize, this had an impact on her attitude toward money and its purpose for her,” he says.
That made his wife more uncomfortable with financial uncertainty and insecurity, he says, which starkly contrasted to his upbringing within a comfortable middle-class lifestyle that made him more comfortable with taking risks in investments and his career. Conflict resulted when they purchased a new home, began expecting their first child and he founded his financial firm within an 18-month period.
[See: A Beginner’s Guide to Investing.]
“Our biggest breakthrough came when we understood each other’s background and differences about risk and security,” he says. “Through conversation and gaining some perspective about each other’s attitudes toward money, we’ve changed our priorities about spending and saving to ensure she always feels secure in our financial well-being.”
That’s the case with a lot of couples, says Rebekah Barsch, vice president, planning at Northwestern Mutual in Milwaukee.
“It can be a sensitive issue for a couple, because we were all raised in a household where money was treated a certain way,” Barsch says. “Maybe the topic of money was a taboo subject or parents stressed and fought about it, or they had a complete savers mentality or a complete spending attitude. Most people believe they were raised the right way. That’s why being open and vulnerable helps to focus on what is important for financial goals and your lifestyle.”
Start by understanding where your respective spouse is financially and understand their personal goals and your common goals as a couple, says Greg Knight, certified financial planner with Engage Advising in Oakland, California. He recommends putting together a binder with all financial, medical, digital and estate planning documents in one place for easy reference.
Create a plan for good — and bad. Find a financial planner who can guide you on how to build an appropriate budget for your future, Barsch says. “If you go to a financial advisor and right away they suggest making an investment and they don’t know your budget and financial circumstances, it’s a red flag.”
“Make sure your financial plan includes options for what could go right and what could go wrong,” Barsch says. “People always think about investing for when things go right, when they are employed and the stock market is going up. But you also want a plan in case things go wrong.”
Couples should start by creating an emergency fund of three to six months that can be used if they lose a job and a paycheck stops. “Many people don’t have that,” she says. “It’s important.”
Just as important is planning ahead in case someone becomes disabled, injured or sick. Even when employers offer disability insurance, Barsch says most of those plans cover only 50 to 60 percent of an employee’s salary. “You have to ask, ‘How would I be if my income is cut in half,'” she says.
Instead, she says consider supplemental disability insurance not just to handle expenses but to make sure you continue to save for your retirement if you’re unable to work.
[See: 9 Psychological Biases That Hurt Investors.]
Consider life insurance. Just as important is planning in case one spouse dies prematurely. Barsch says a couple she knew owned an outdoor business. When the husband died suddenly, the widow was left trying to run the company as a single parent with only $10,000.
“Having life insurance is piece of mind when your world falls apart,” she says. “The last thing you want to worry about is money.”
Instead, she says couples should consider whole life insurance, also known as permanent life insurance, which has a death benefit as well as a cash value of the insurance plan — the amount you’ve already paid into the policy — if an emergency arises. She says having permanent insurance can be helpful when individuals need a flexible asset that can help pay for anything from college tuition to purchasing a new car or be used later in life as an estate planning tool.
Unlike whole insurance, term life insurance can be purchased for various terms, hence the name, including 10, 20 or 30 years of coverage.
“Term life insurance is very effective when you are on a tight budget and want to make sure whole family survivor’s income is met,” Barsch says. “It’s like renting an apartment. It isn’t good or bad, but eventually you may want to buy instead of rent.”
Know where your money is going. Another mistake some couples make is not knowing what you’re spending money on as a couple and allowing one person total control over the savings, spending and investing, Knight says.
“Both people need to be engaged,” he says. “Talk about what is going on.”
Working together as an economic unit is key, Knight says. Have the higher-earning spouse assist the lower-earning spouse to find new employment, education or a business goal to improve overall earnings and potential, he says. Consider using a divide-and-conquer methodology where one person’s salary pays down debt and monthly expenses while the other salary fully funds both retirement accounts.
Check credit reports regularly. SaraEllen Hutchison, an attorney at law in Tacoma, Washington, says she gets a lot of clients into her office after they’ve discovered there is false information on their credit reports.
Especially for couples who are looking to purchase a house this spring or summer, they need to do a credit report checkup now since it takes at least 30 days for a credit reporting agency to correct any inaccuracies.
[Read: 10 Simple Ways to Raise Your Credit Score.]
“A correct and accurate credit report is a big financial piece that many couples overlook until the last minute,” Hutchison says.
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5 Financial Tips For a Happier Marriage originally appeared on usnews.com
