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Center Feature ...
Does Financial Planning with Your Spouse Make You Scream?
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Do you and your mate have difficulty talking about the "M" word -- as in money? Do the decibel levels sometimes break the sound barrier at your home, especially during bill-paying time? Well, you're not alone.
According to a new survey conducted by NFO Research for IHateFinancialPlanning.com, 25 percent of American couples argue about money at least once a month -- most often when the monthly credit card and utility bills are sprawled out on the kitchen table. And the primary reason why they argue? The other partner spends too much money or didn't tell their better half about a purchase.
Randy Schuldt, a financial professional with IHateFinancialPlanning.com, a new Web site for the 75 percent of Americans who hate or dread financial planning, says talking about and managing money with another person is never as easy as it looks, and that's why "money" is often cited as one of the major factors causing divorce. IHateFinancialPlanning.com's recent survey bears this out: Americans generally believe they do a good job of managing their personal finances. But, when men and women are asked, which gender does a better job of managing money, men believe that men do, and women side with their own sex.
"Right from the get go, there's conflict," Schuldt says. "Not just between genders, but between individuals who have their own dreams, fears and concerns. Finding a middle ground can be difficult."
"Who earns how much can be a bonding or divisive issue in a marriage," adds Pam Patrick, a professor of psychology and human services at Capella University and a marriage and family counselor with Counseling and Family Services in Daytona, Fla. "When people come to me with marital problems, quite often money management is at the top of their list."
So what can people do to overcome these obstacles? The key, says Patrick, is communication.
"Merging your money doesn't have to be a problem," Patrick says. "By talking about your expectations and what money means to each partner, it's possible to alleviate many of these problems."
To help couples talk about the dreaded "M" word, Schuldt and Patrick offer the following tips:
Make a Date
Because money can be such a difficult and touchy subject, many couples avoid talking about it, especially if a couple is deep in debt. Unfortunately, the longer a couple avoids each other about this topic, the greater the problem becomes. Schuldt and Patrick recommend that couples meet once a week or at least every two weeks to talk about their household budget, and develop a plan to cut debt and start saving and investing. Couples also may want to consider tuning in weekly to radio programs such as National Public Radio's Sound Money, which airs on Saturday mornings, or PBS's Right on the Money.
True Confessions
If a couple truly wants to get their arms around their finances, they need to lay it all out on the table. That means writing down all debts and savings, and carefully looking at where a couple's money is coming in and where it's going out. One of the best things a couple can do is to track all expenses on a monthly basis. Many couples are shocked at how much they spend on fast food, or how quickly those cafe latte's at Starbucks every morning can add up. "The point of this exercise is to identify areas where the couple can cut back and use those extra dollars to pay down debt and begin investing," says Schuldt.
Get Help
It's very easy, says Schuldt, for one partner to blame the other for the mess that a couple's finances are in, or for one mate to fall into the role of a martyr -- sacrificing everything for the good of the couple. The fact is, money brings with it a lot of emotional baggage that sometimes two people simply can't sort out by themselves. That's when a couple should get help and utilize the services of a marriage counselor to better understand the attachments that their partner places on money, budgeting and retirement planning.
Deal with the Debt
When it comes to paying off debt, says Chris Newell, principal with Newell Financial Corp., Little Rock, Ark., start high. Rather than concentrating on paying down a little of each person's credit cards, find out the interest rate for each person's cards -- it should be listed on the monthly statement -- and pay down the highest debt and highest rate cards first. "First, make a pledge, 'no more additional credit card debt,'" Newell says. "Then, start paying off the highest debt cards first. As soon as one card is eliminated, apply the same payments to the other cards. Never reduce the total debt payment amount until they are all paid off. You will have to be disciplined and pay substantially more each month than the minimum balance."
Learn Together
Like just about anything, there are some people who naturally know how to manage their money. Most people however, have never learned how to manage their personal finances, which may be why so many Americans hate financial planning. That's where a financial professional, complemented by useful Web sites such as IHateFinancialPlanning.com, can help a couple learn about money, personal finances and financial planning. "Don't expect to learn everything there is to know overnight," says Schuldt. "Make assignments and use your financial planning dates to share what you've learned."
Divide and Conquer
Marriages thrive by dividing responsibilities and putting one person in sole charge of that activity. Bookkeeping is one of these, says Patrick. For most couples, the best decision is to choose a full-time financial steward. This person should be responsible for saving receipts, keeping the budget and paying the bills. "Some people simply can't have cash in their pocket. They just don't have the inner sense of accountability," Patrick says. "Therefore, couples need to determine who will write the bills every month. There's no extra credit for it. It doesn't make you a better person. It's just part of making a marriage successful." Does that mean the other partner is off the hook? Absolutely not. The other partner's strength may lie in researching or dealing with financial professionals, such as bankers, financial planners, etc. Couples need to learn who does what best and how to best leverage those strengths.
Set the Ground Rules
There are good surprises and bad surprises, and then there are those surprises connected to credit card bills and checks. "When people are single, they might make a big purchase without giving it a second thought," Patrick says. "However, when they are married, they might do the same thing and see their spouse blow a gasket. It's real important to clarify if spending money is always, sometimes or never a mutual decision."
Where problems can occur is when couples have different ideas about what constitutes a worthwhile independent purchase. For some people, it may be $50 in clothing; for others, it may be $10 on lunch a few times a week. According to Schuldt, both approaches are okay as long as both partners agree on spending limits and how to keep the other partner informed about purchases.
Some couples solve the problem by creating his and her funds. For example, if she really likes investing in the stock market, the couple sets aside a certain percentage that she can use to invest on a monthly basis.
Assess Risk Tolerance
He finds penny stocks exciting; she believes keeping all of the couple's savings in a CD is the wisest investment. It's important for couples to recognize the differences in their spending and savings styles -- particularly each other's tolerance to risk. What may seem like a very risky investment to one partner, may not to the other. In addition, Schuldt says it's also important to recognize what the other partner values. For example, it may be very important to one partner to never pay for anything without cash in the bank.
Plan on a Long Life Together
With medical breakthroughs occurring daily, many people now live way beyond the average mortality rate. But are they financially prepared to maintain a lifestyle should they live past their 80s or 90s? Many are not. That's why it's imperative for a couple to begin planning their retirement now -- even if they're in their early 20s. As part of addressing important financial issues such as debt management, emergency savings and life insurance, couples should consider working with a financial professional to map out a plan that will ensure that they have enough savings and investments to meet their retirement years needs.
Dream a Little
He wants a boat. She wants to see cathedrals in Italy. He wants a cabin. She wants a big home. They both want enough money in the bank to retire comfortably. The point is, money can make some dreams happen -- it can give a couple the financial freedom to share experiences together and to learn about themselves. Can they have it all? Maybe. But those dreams will never come true if a couple doesn't identify to each other those experiences and material goods that they really want for each other and their children.
"Financial planning probably has a bad rap because many people think if they look hard at their finances that they won't be able to do the things in life that they've dreamed about since they were kids," says Schuldt. "The reality is that financial planning can be fun and rewarding, especially when you see your money grow and allow you to achieve life experiences you never thought possible."
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