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By Joshua
Goodwin
Money has
caused headaches for countless people. Never is that more true than
in marriages. In fact, more marriages collapse over financial
problems than for any other reason. The interesting thing is that
very few people divorce their partner because of a lack of money,
but rather from disagreements over how to manage the finances that
they do have.
Financial
incompatibility often is the result of radically different
approaches that people have towards money. Although psychologists
have many different groups that they like to categorize people into,
for financial purposes most people fall within one of two
categories: savers and spenders. You probably already know which
type of person you are and usually you perceive your spouse as being
in the opposite category. This is because opposites attract and is
not always a bad thing!
Savers are
often attracted to spenders because they see them as generous,
fun-loving, adventurous folks. Spenders are attracted to savers
because they think of them as grounded, fiscally responsible
individuals. Having both a saver and a spender in a marital
partnership can help achieve a good balance. Savers can end up
living a miserable existence because they can’t bear to part with
any of their money. Spenders can get so deep in debt that they
can’t enjoy the things they spent the money on in the first place.
There has to be a balance achieved between the two. Savers have to
realize that financial security doesn't demand stashing money in the
bank to the exclusion of everything else. Spenders have to realize
they can’t just buy anything and everything that they take a fancy
to. So don’t despair if your partner has a different financial
outlook on life than you. God put you together for a reason!
So what
makes one person a free spending spirit and another a frugal saver?
In most cases, people simply follow the example of their parents.
Financially irresponsible individuals have probably grown up
watching their parents make the wrong decisions as well. They simply
never learned how to do things the right way. However, regardless of
the type of person you are there are some actions you can take to
help you get your financial house in order:
Develop
a budget
A budget
is a good first step in defining financial limits and long-term
goals. A detailed budget forces you to balance income with expenses,
while allowing you to make adjustments as needed. Constructing a
budget should accommodate the needs of both partners, even if one is
a spender and the other a saver.
Set
long-term goals
Couples
often spend more time planning their family vacation than they do
discussing their long-term financial goals. So you first need to
sit down and agree on your big-picture goals – things like saving up
for a down payment on a house, funding a retirement account, or
paying off the mortgage ahead of schedule, etc. Then set up a
schedule to achieve those goals.
Share
decision making
Develop
guidelines for making major purchases, starting with how you decide
what to buy and when. Going out and buying a big-ticket item without
your partner's knowledge or consent is definitely a recipe for
disaster: Decisions on major items should be arrived at jointly –
where to go for vacation, what type of new car to buy, etc.
Live on
one paycheck
In 2005,
51% of families had both the husband and wife employed outside of
the home. However, even with two-incomes many
of these couples live paycheck to paycheck with total disregard for
the future. Taking this approach can be the beginning of future
money problems that can strain your marriage. Saving one of your
paychecks can help build-up a nice down payment for a house or the
expense of having children or just an emergency fund. You
may not always have that second paycheck coming in. So even if you
have two incomes, try to get by on only one paycheck and save the
other.
Create
a wish list
Both you
and your spouse should sit down and create a wish list of things
they would like to do or have. These items could be regularly
occurring (going out to eat once a week) or they could just be
one-time events (vacation to Europe). The challenge for the spender
is to realize that they can't immediately have everything on the
list. On the other hand, a saver shouldn't try to force a
bare-bones existence on a spender. There should be items on your
list that you can compromise on and there should be others that are
joint goals that you both want. This is a long-term list and some
things you may not be able to achieve for several years, but it will
at least give you something to work towards. An additional benefit
is that it helps you understand what is important to your partner
and what they value the most. You may be surprised that some things
that don’t cost that much are actually valued very highly by your
spouse.
Have
the spender pay the bills
If one
person tends to be the spender in the family – have them pay the
bills each month. This way they get a better understanding of how
much money is going out each month compared to the income you have
coming in to pay those expenses. It’s easier to spend money when
you never have to worry with how those expenses are paid. If you
are the one having paying the bills and you know there isn’t any
money in the bank account, hopefully that will be a deterrent for
you not to spend the money in the first place.
Set
priorities
Spending
time with your family should always take priority over trying to
earn more money. Nothing can strain a marriage more than having one
party always working late into the evening or working weekends just
because they want to have more money. Having a higher standard of
living isn’t just measured in by the size of your bank account.
Spending allowances
It might
be wise to set aside some money each month to feed the spender's
need to burn cash. The amount should be budgeted, but there would be
no need to keep track of where the money goes. This satisfies the
saver by keeping the spending within limits and gives the spender
some “free” money that they can use on anything they want.
Grow Up
There's a message in your
quickly evaporating checking account balance - you're not a kid
anymore! You've got to begin thinking about things like a mortgage,
insurance, saving for college, retirement, etc. No longer can you
afford to buy anything that you take a fancy to. Your
responsibilities have to take priority over your wants.
Start
Saving
It seems
that few people these days actually save any of the money they
earn. In fact, beginning in 2005 and continuing into 2006 the U.S.
personal savings rate has actually been a negative amount. So
collectively, we are spending more money than we earn. This is a
very disturbing trend, because just 20 years ago people were saving
more than 10% of their income. It's never a good idea to spend
every dollar that you make. Set a reasonable savings goal each month
and stick to it, even if it's only $100 per month. You can even set
up automatic deposits from your paycheck.
 
In
conclusion, you and your spouse have many decisions to make, which
means plenty of opportunity to disagree with each other. How you’re
going to handle your finances is one of those key decisions that you
can’t afford to just avoid. The simple truth is that money issues
are with us every day. If you aren't in financial sync, your
marriage could be in deep trouble. Harmony in financial matters can
help lead to harmony in other aspects of the marriage.
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