Marriage is one of the biggest decisions most people will ever make. Your happiness, well-being, and the future of your family can depend on it. Choices you make in your marriage can also affect your financial future.
The second in my webinar series on Managing Money as a Couple dealt with the early part of a marriage and how many of your choices at that time can have far-reaching consequences.
Marriage, of course, is a romantic endeavor. You care deeply for your spouse and look forward to a lifetime of facing the world together. It’s also like running a small business — as partners. If you look at marriage as a partnership, planning and deciding major steps as a team, you’re more likely to move forward smoothly.
Division of labor
One of the first items to think about is who is going to do what. You both have careers, commutes, deadlines, and after-hours work-related duties. You also have an apartment or house to clean, errands to do, financial obligations, food to shop for and prepare, and family commitments to keep. How will you get it all done?
I suggest the best way to arrange all these chores is to learn how to divide and conquer them. Being proactive prevents misunderstandings, and ensures the tasks get done. Is one of you a great cook or at least a lover of cooking? Great! That person can cook and might be the one to shop for groceries, as well. Is one of you a whiz with spreadsheets? Perhaps that person can handle the long-term finances, like investments. They might also pay the bills. If one of you enjoys shopping for presents, they could keep track of family birthdays and buy cards or gifts. If you decide, as a couple, who will do what (for now), you’ll have a clean house, a full fridge, a happy Aunt Grace (It was her birthday last week.), and a healthy credit score.
What about the children?
When it comes to larger issues, like whether to have children, and how to raise them, planning is vital. You don’t have to pick out names yet, but it’s wise to think about your philosophy. If you want to have kids, how many do you want? Will one of you stay home to raise them? For how long?
These choices will have consequences for your careers, your homelife, your children, and your financial outlook.
If someone stays home for a few years to take care of the kids:
- Can you afford it? For how long?
- How and when will they return to the workforce?
- Will they need additional training to restart their career?
If you both continue working:
- Will you hire a nanny or au pair?
- Will you place your children in daycare? Which one?
- Do you have family members who can help?
The cost of daycare or a nanny can approach some yearly salaries. Even so, it may be worth it. Even f the cost of childcare is high, it may be lower than the cost of retraining for and reentering a career. Those non-earning years also affect your lifetime balance sheet – your family will have fewer lifetime financial resources.
It is essential to think all this through together. Agreeing on a philosophy helps when something unexpected comes up. As I’ve mentioned in other webinars, if you don’t make a financial plan, you still have one; it may just be one you don’t like.
Charmer or mansion?
Another big issue is housing and lifestyle. Early in your marriage you may rent a house or apartment. Later, many couples want to buy a house. It’s important to discover how you each want to live. Have you always dreamed of a large suburban home with a big backyard for kids and parties? Do you want a townhome in the city? What’s more important to you, a big house in an expensive area and new cars in the driveway, or a smaller, more affordable house, used cars, and travel or private schools for the kids? Since many couples argue and even break up over finances and lifestyle, talking about this is essential.
Work/life balance in marriage
How career-oriented are you and your spouse? Are you alike or do your approaches to work differ? Is one of you a workaholic, forgoing a dinner out to stay late at the office working on a presentation? Does the other look at work primarily as a means to an end? If you’ve discussed this and you know where you stand, this can be fine. It may even help you decide who bears the brunt of the child-rearing duties or stays home when the time comes. You don’t have to be alike, just aligned.
Financial planning
Discovering how your spouse wants to live early in your marriage is as important as finding out about your fiancé’s financial picture before you get married. Do they expect to work long hours, belong to the country club, and take lavish vacations, or would they prefer to work standard hours and spend more time together? Many people fall somewhere in the middle, wanting to live well, but not at the expense of family life. When it comes to any of these concepts, communication and compromise are vital.
Everyday choices
Big picture planning is important, but the smaller, day-to-day choices also add up. Do you go out to dinner four nights a week, or do you buy groceries and cook at home? Do you have a big expensive car that only takes premium gas, or an economy model? Do you buy new clothes often, or do you have a small wardrobe? Do you make coffee at home or go to a coffee shop? The differences may seem small, but they add up and every dollar you spend is less you save. That doesn’t mean you can’t ever go out to dinner, just that it’s smart to spend with intention.
Get on the same page
People, even married people, are different. They have different wants and needs and different aptitudes. That can be a wonderful thing if the two people agree on a few basics, keep track of what is going on, and talk to each other. Years of financial planning work have taught me that this often doesn’t happen. I can’t tell you how many couples come into my office unsure about their spending and investments. One might say, “I think I still have a 401(k) at the company I worked for ten years ago.” “You do?” asks the other spouse. When I ask which mutual funds they hold, they are uncertain. Situations like this are more common than you might think. Planning, keeping track, and communicating about your finances are all important — even two out of the three are not enough for you to stay aligned and move toward accomplishing your shared goals.
Financial resources
Good communication about financial matters relies on good financial information. If you need a hand, good software is available to help you organize your finances. We use MaxiFi, a planning tool that can show you how today’s financial decisions will affect your choices in the future. I also like Quicken for keeping track of your day-to-day spending. It can be easy to use (keep it simple!) and very helpful.
There are also books you can use to help guide your choices. The Pie Life by Samantha Ettus deals with looking at your life as a pie and the parts as slices. The Family Firm by Emily Oster is based on the premise that running a family is like running a small business. I have read parts of both books, and I think they are nicely done.
As always, you can contact your financial advisor or me rick.miller@sensiblefinancial.com if you have questions.
Photo by Soroush Karimi on Unsplash