Six Money Mistakes of Newlyweds

When you get hitched not only do you join yourself together in love and spirit, but you also join together your bank accounts and take on each others debts. For many this also means buying your first home together and taking on a mortgage. Here are six great tips of solid advice from a writer for Kiplinger.com, a personal finance and business website.



Six Money Mistakes of Newlyweds

By Erin Burt
Kiplinger.com

Whether you're planning a walk down the aisle soon or you've already gotten hitched, watch out for these financial pitfalls that can strain even the strongest marriage.

Four words no one wants to hear soon after his or her wedding day: "We made a mistake."

I'm talking about financial choices - not your choice of spouse. Unfortunately, many newlyweds set themselves up for failure soon after they say "I do." If you bring bad money habits to the marriage or fail to come up with a plan to merge your financial lives, you could potentially doom your relationship to money trouble - and endless arguments. Not exactly "happily ever after."

However, nothing says "I love you" like the desire to start your marriage on the right financial foot (roses, schmoses). Here are six common pitfalls that trip up new couples. Steer clear of these, and you'll decrease the money tension and increase the harmony in your new life together.

1. Keeping money secrets

Money is one of the most common sources of arguments in a marriage, so it's best to simply avoid the subject altogether, right?

Wrong! Some of the most heated arguments stem from failing to discuss financial backgrounds, expectations and attitudes from the start. Communication is key to the survival of any relationship, and bearing your financial soul to your partner is no exception.

Ideally, you want to have this conversation before walking down the aisle. After all, there are good marital surprises ("Didn't I tell you I'm a gourmet chef?") and bad surprises ("Didn't I tell you I have $20,000 in credit card debt?"). Full disclosure is in order here - and that includes your shoe fetish or gambling habit. For tips on what to discuss, see Ten Questions to Ask Before Saying 'I Do.'

2. Not having a budget

Now that you're settling into your new life together, it's time to discuss the b word. No, not baby. Budgeting. You're merging two spending habits and two saving habits into one household. So even if you had a budget when you were single (pat on the back), you've got to make a new one with your husband or wife to include his or her income, debts and monthly expenses. That will help to ensure you have enough money left over for that other b word - Bahamas.

Use our budget worksheet to start. Your first step is to write down your fixed expenses - such as your rent, car payment, insurance premiums and student loan payments. You should also make a habit of contributing to your savings or investments as if you were paying a fixed bill each month. Then write down your flexible expenses, such as utility and phone bills, transportation costs, groceries, trips to the ATM, and miscellaneous purchases. Track your actual spending for a couple of months to see where your money really goes, then find the spending leaks and plug them. Building a budget is a great way to set common spending and saving goals, identify problems, and work together to fix them.

3. Giving one person the financial reins

The honeymoon's over, and it's time to get down to the nitty-gritty of the daily finances. Who will physically pay the bills, monitor the investments and crunch the taxes? One person may be more inclined toward these tasks, or you may decide to split the responsibility or trade off each month.

There's nothing wrong with letting one person take over the family finances, as long as both partners are okay with that decision. But that doesn't mean the other partner should be excluded. It's important for each person not only to feel involved in the big financial decisions but also to have an understanding of the day-to-day finances. You each need to know all your different account information, passwords and bill due dates in case anything were to happen to the other person. And no matter how you divide the responsibility, it's a good idea to have a regular "money date" each month or so to make sure each of you is in the loop. You should go over your budget, review your savings progress and discuss upcoming expenses together. How's that for keeping the romance alive?

Also, if you choose to combine your finances after you wed, make sure that major purchases and savings accounts are held in both of your names so that each of you has equal access and can maintain a credit rating. You don't want to find out in the event of a divorce that your name wasn't actually on the car title or savings accounts.

4. Dragging debt down the aisle

What's his is hers, and what's hers is his. Whether you decide to combine your finances or maintain a separate approach, if one of you brought debt into the marriage, it becomes a problem for both of you. You'll need to work together to come up with a plan to pay it off. However, you should never officially commingle your debt. Doing so could hurt the credit score of the other partner and make it difficult for one or both of you to get credit later. Keep existing credit-card and loan accounts in the original holder's name.

If you can help it, it's best to avoid beginning your marriage in the red. Many newlyweds make the mistake of going too far into debt to pull off the wedding of their dreams, go on an exotic honeymoon, or buy brand-new furniture and appliances for their home. Before you dig too deep, you should sit down together to determine which expenses are necessary and which are worth a splurge - and come up with a plan to pay for it all before you spend it.

5. Sweating the small stuff

Marriage is about compromises and simply letting some things slide. So she squeezes the toothpaste tube from the middle, and he doesn't pick up his socks. Big deal. You'll both soon learn to pick your battles and save your energy for issues that really matter.

That goes for picking your money battles, too. I remember my first financial argument with my husband. We had been married two weeks, and we were doing our grocery shopping together. He wanted to buy the brand-name chocolate chips, and I felt strongly that we should save 75 cents and go with the off-brand chips. After a lengthy and heated exchange, we divided up the rest of the shopping list so that we wouldn't have to look at each other for the rest of our outing. Then we drove home in a huff. Lesson learned: Never go grocery shopping when you're hungry, tired and irritable. Oh, wait. Financial lesson learned: Don't sweat the small stuff. Was the argument really worth 75 cents? No way.

Of course, if all the little stuff is adding up to a big drain on your finances and causing you to live beyond your means, bring it up at your next money date and work together to find ways you can both cut back. (Ah, there's that compromise idea again.) But take note: It's important that you build a little "mad money" into your budget for each person to spend at his or her own discretion. (Can you imagine asking your spouse for permission every time you wanted to buy a cappuccino and a muffin, or grab a drink with some friends after work?) But as far as the big stuff goes, make it a rule to consult the other on major purchases. You don't want to come home and unexpectedly find a brand-new Mercedes in the driveway, and the bill that goes with it.

By the way, I now go grocery shopping alone. We decided as a couple it's what's best for our marriage.

6. Failing to plan for an emergency

No one likes to think about bad things happening, but in all the excitement of your engagement, planning your wedding and moving in together, it's easy to overlook this important aspect of financial planning. One of the best gifts you and your spouse can give each other is financial security and protection from life's storms.

First, assess your emergency stash of cash. Every couple should have enough money available to cover from three to six months worth of living expenses. You never know when the car will break down, one of you will lose a job or you'll have an unexpected medical bill. Learn more about how to build your financial foundation and where to keep the money.

Then, you need to make sure you have adequate insurance coverage, including health, auto, renters or homeowners, and possibly life insurance. Learn more about the types of insurance everyone should have, and how to get the appropriate coverage.

Did you get married without a prenuptial agreement? It's not too late to protect the financial interests each partner brought to the marriage. Consider drafting a post-nup with your lawyers. Plus, make sure you each have written a will to divide your assets in the event of your death.

See Also: Secrets to Marital and Money Bliss, 10 Questions to Ask Before Saying 'I Do', A Primer on Prenups

Reprinted with permission. All Contents c 2010 The Kiplinger Washington Editors. www.kiplinger.com.

Sharing Your Wedding Day? Who to Invite?

Combining two families is a delicate task, one that can be illustrated by convoluted wedding seating charts. Can you put that crazy aunt whose plus one is bound to be a mesh t-shirt wearing man with a mullet next to your mother in-law who still talks about the greatness of the Reagan years? Well, you will have to read our next posting to learn more about seating charts because prior to even beginning to think about the seating chart is the guest list. Before you can consider where to place your guests, dj, food, and dance floor in the reception space, you need to have a clear idea of who should be invited to your special day. More importantly, who should not be invited?

This is the sort of awkward social dilemma that leads many couples each year to throw caution to the wind and elope. It is an easier task to include no one than to attempt to include just the right people. Conversely, countless brides and grooms to-be are so terrified of offending people that they augment their wedding budget so that they can invite their dental hygienists and neighbors’ dog walkers and their guests.

To avoid making rash decisions or spending an exorbitant amount on too many guests, you need to make a game plan for your guest list. It should be constructed in three parts. Before you and your significant other reserve a venue, set a cap on the number of guests you can afford to accommodate. The costs that will be affected most by the number of guests you invite are catering and the venue. Stick to this guest count cap as fastidiously as you do with the rest of your wedding budget.

Then, make your first list. This will be a rough draft. If your potential attendees exceed the limit you set, then it is time to shed. It is necessary to be selfish and start to seriously question who deserves the invitation. If you haven’t spoken to people in more than a year, then are they important enough to merit spending money to invite them to your wedding? If you do see the person on a regular basis, ask if their relationship to you is one of organic friendship or if it is involuntary. For example, you may see your barista everyday and enjoy her banter, but if removed from the context of Starbucks and caffeine deprivation you two would not be best buds, then skip the invite. She will forgive you and will still have to smile and make your coffee every day. Win-win for you. Another factor to consider when cutting the list is mutual friends. If your list includes people with whom you share no mutual friends, then odds are they will be lonely at the wedding. Now what to do about ex-partners or even spouses who are still in your lives? This is a very personal decision, one which should be delicately discussed with your partner. But I believe that no matter how friendly one person is with the ex, if the other person objects to anyone on the guest list, then nix the invitee altogether. It’s never worth risking your relationship with your future life partner over a past relationship. Finally, consider who would be least offended if they weren’t invited. It may sound crass, but I certainly have a few second cousins who, while they are connected by blood pop into my life more than once a year, would not blink twice if not invited to my wedding.

Now ignore your list until two weeks before you send out invitations. In the time that passes between your rough draft guest list and this final draft, people will leave and enter your life. This is the time to kick off the friends who have been incommunicado and replace them with newly important people in your lives.

If you are unable to invite everyone to your wedding who you feel should be, remain cognizant of the fact that in the grand scheme of things, those who truly love you and value your friendship will understand that weddings are expensive. You and your fiancé’s happiness are what’s most important on your wedding day and if keeping costs down will make you both happier, then stop worrying about offending people and cut your guest list.

Hannah! Our Wonderful Apprentice...

For anyone who doesn't know, we did a search at the end of last year to find an apprentice/intern to help out with events, and learn from us along the way and probably teach us a thing or two as well. In January we brought on a wonderful gal named Hannah that we decided would fit the bill.

Not only has Hannah been a great blogger and a big help at our first wedding of the season but she has great ideas as well. Here is a short bio about her:

Hannah started planning events as a college sophomore, when she became President of a large statewide political non-profit organization. She planned at least 5 events quarterly for the following 2 years, from concerts to guest lectures and formal banquets.

In her senior year at the University of Washington, Hannah obtained a marketing and communications internship at a bridal website. This piqued her interest in the wedding industry and she has pursued a career in it since then. Last year she also worked in a bridal fashion shop, where she was fortunate enough to converse with brides on a regular basis while playing dress up!

Hannah is working with Ashley and Christina to find a way to combine her event planning experience with her love of all things wedding related and hopes to manage her own wedding consulting business someday as well.