Money advice for newlyweds
With wedding season upon us, a new crop of newlyweds will be trying to figure out how to agree on spending money smarter. But because opposites can attract in both love and money, that task could derail wedded bliss.
Newlyweds, whether young people or those on the second time around, need to find common ground on a number of money issues. But spending might prove particularly challenging. In fact, many longtime married couples struggle to achieve spending harmony, or at least a truce.
Think about it this way: At the root, money is good for only one thing, spending it. The question is, when?
Spending yesterday refers to using money to pay for things you already bought. In other words, debt. It will help early on to agree on a strategy about paying off debt and using debt in the future. Young couples might have student loans, car notes and credit card debt from the wedding and honeymoon. Older couples might have a mortgage, home-equity loan and credit card debt.
Which debts should you pay first? High-interest credit cards come first. Will you attempt to pay cash for cars in the future, even if it means buying used? Will you have an agreement to charge on credit cards only what you can afford to pay off monthly? If you need to remodel the kitchen, do you save up and pay cash or take out a home-equity loan?
Spending today refers to current spending in day-to-day living. The foremost question is whether you should combine finances, keep them separate or have his, hers and ours accounts. The answer might hinge on the personalities of the couple and require some trial and error.
Get-out-of-debt specialist Dave Ramsey is fond of saying, "The preacher didn't pronounce you a joint venture. He said, 'Now you are one.' "
Ramsey advocates combining all aspects of your financial lives after marriage -- income, debts and all the related accounts.
If you agree on everything you spend, you'll be the first couple in human history. Prepare for disagreements. You're unlikely to turn a math-challenged, free-spirited spender into a spreadsheet-wielding saver, but you need to find middle ground and develop boundaries.
Among those boundaries is a "must-tell" limit. That's the dollar amount you can't spend on a discretionary purchase without telling your spouse first. One suggestion: double your household income and chop off three zeros. The must-tell limit for a couple making $80,000 a year, then, would be $160.
