Thursday, July 27, 2017

How Finances Affect Your Happily Ever After

This post is going to be a little different. Instead of the typical paragraphs and is a story. It's not a true story, but a mixture of many, many true stories. 

Colt and Ava. They met in college, dated a few years, he planned a romantic dinner, moonlit walk, and got down on one knee with a ring. Now, their big day has come and gone. It's time to begin the marriage.

In premarital counseling, they were warned to discuss finances and set a budget together - and they were going to! But tonight Colt is working late, the other night they went on a date (and who wants to talk about money then?), and the other night Ava was in her tree stand. The days roll by and they never actually sat down to make a plan. 

They set up a joint account and moved on. 

Besides, they tended to agree on most things when it came to money. 

Fast forward a few years. 

Colt and Ava are still very much in love. But they are finding little annoying things about each other. 

One day, Ava come home with a new, $1000 bow. Colt, not wanting to be a controlling husband but annoyed that she didn't even give him a heads-up, just pushes it aside and tries to move on. 

He's been reading about investing and wants to start preparing for retirement. But, he's worried Ava might not agree so keeps putting it off. 

Ava notices how Colt stops for coffee every single morning before work. She thinks to herself how much cheaper it would be to just make a pot at home. She is also worried about the fact that their bank accounts were a little low. Maybe they should start an emergency account? But she doesn't want to start a fight or make Colt feel bad about anything. The conversation is never brought up. 

Little things like these keep getting pushed aside, building up inside them both. 

Then, Colt hits a deer on his way home. The damage will cost $5000 and their insurance isn't going to cover it. 

He tells Ava. She feels stressed and scared. To Colt though, she seems mad and disappointed in him. So it begins.

Soon, they are yelling. Everything that had been building up is coming out. The bow gets brought up, the coffee, the emergency's not pretty. In tears, Ava runs to bedroom and slams the door. Colt, feeling like the worst husband in the world and mad that Ava would make him feel that way - it wasn't HIS fault the deer ran in front of him - storms outside. 

They spent the evening in silence. 

They spent the next morning in silence. 

By the next evening, they both knew something had to change. 

Fortunately, they were both able to apologize, move on, and learn their lesson.

The next few nights, they sat down together and spent hours discussing where they want to be financially in the next few years, how they can get there, and how they can do it together. 

They make a plan for saving and investing, for an emergency fund, and for a budget. They decided that if either of them want to buy something over $150, they would discuss it first.

These discussions didn't go perfect. They disagreed on several things. But by talking it through, they were able to meet in the middle with a solution they both agreed on.

 And of course, they lived happily ever after. 

So, what is the point of this story? Well, wedding season is coming to a close. We know there are many couples just beginning their lives together. We want them to know how to avoid financial mistakes so they avoid the stress and money fights that come later. 

What mistakes did Ava and Colt make? 
  • Avoiding the money talk. Everyone has a different view on money, and it's important to align your goals and understand your differences.
  • Not setting a budget. Determining how you will spend your money as a couple will build trust and communication right from the get-go.
  • Not having a plan for your accounts. Discuss whether you prefer a joint account, separate accounts, or a combination.
  • Failing to set up an emergency fund. Life is full of surprise expenses. If you've worked to set up an emergency fund to cover such costs, it's no longer such a big deal.
  • Not establishing a minimum cost for discussing big expenses.  For some, this might be $50. For others, $5000. As long as you are both in agreement there isn't a right or wrong amount.  
One other thing you shouldn't forget. Now that you’ve tied the knot, you should likely name your spouse as beneficiary.  Your will, life insurance policy and financial accounts like your 401(k), checking and savings. Don’t make the mistake of waiting for an emergency to arise to handle this, it might be too late by then. We know, no one wants to think of these things happening, but be prepared.

If you recently got hitched, congratulations! I hope this story will help your marriage get off to the best start possible.