“For richer or poorer” are words which will be repeated by thousands of couples at wedding ceremonies over the next few months. But even as they make this promise to each other, few have had any discussion, or made any plans with reference to their financial future. Money can be an uncomfortable subject under any circumstance, but reluctance by newlyweds to address this issue can lead to unnecessary misunderstandings, unfulfilled financial dreams and, over time, marital stress.
“Newly married couples face a double challenge,” explains Kathleen Stepp, spokesperson for Citibank’s Money Matters for Newlyweds consumer financial education program. “Not only must they continue to manage their own spending, but now they must make adjustments to accommodate the money personality and skills of their partner.”
Citibank is making this task easier with a new brochure titled To Love, Honor And Budget: A Financial Planner For Newlyweds. It helps couples with the process of marrying their finances and guides them in the development of a new spending plan. The brochure includes a budget worksheet that lets couples figure out their expenses and income, encourages saving for short-term and long-term goals and moves them towards successful money management.
This is a companion piece to the Newlyweds Financial Bliss Quiz that Citibank previously created to open the lines of communication between couples. Each partner takes the quiz, which asks questions such as “How important to your happiness is having money?” and “How good are you at keeping your checkbook?” By sharing their individual responses, the couple learns of differences in their money attitudes and skills. These differences can then be taken into consideration when making plans for their financial future.
To become financially compatible and reach financial goals as a couple, planning is essential. Ms. Stepp offers the following points for couples to think about while working on their spending plan:
— Know Where Your Money Is Going. As a single person, you could spend your money as you wished. Now, how and where you spend money affects your partner. Track your spending for one month by writing down all expenditures, no matter how small. How will this spending pattern fit in with your new marital situation? How will you merge your spending habits?
— Discuss Money Management. Who will control the checkbook, or will you share the responsibility? Consider a joint account for shared expenses while maintaining individual accounts for personal expenses. Shop around for a credit card that best fits your needs — would that be a low interest rate card with few benefits or a higher interest rate card that offers rewards that are meaningful to you? Decide if you will share a credit card or have your own.
— Create An Emergency Fund. Establish an emergency cash reserve. A safe amount would be enough to cover your expenses for six months.
— Determine Financial Goals. Discuss your short-term and long-term financial goals as a couple. Communicate your feelings and listen to your partner. Both of you will probably have to make compromises about what is important to your household. Paying down debts should be a priority.
— Start Planning For Retirement. It is never too early to start saving and planning for retirement. Many companies offer retirement plans, such as a 401(k) program. Since this money is deducted from your paycheck before taxes are calculated, you are not only saving but are also keeping more of your wages. Also, many employers will make additional contributions to an employee’s plan. If you can’t participate in a 401(k) plan, consider an IRA.
“The key to this process is openness and flexibility. Your priorities change when you marry, and will continue to change throughout your marriage. Developing good communication skills in the beginning can create both a successful financial partnership and satisfying marriage,” says Ms. Stepp.
As part of Citibank’s consumer financial education program, Keeping Your Financial Balance, Citibank offers free To Love, Honor And Budget: A Financial Planner For Newlyweds, the Newlyweds Financial Bliss Quiz and the Money Matters for Newlyweds booklet, which provides financial advice for newlywed couples. To receive these materials, please call 800-669-2635.