As many of you know, Bo is getting married in less than two months, so his upcoming wedding has been a hot and heavy topic around our office. We feel that Bo is a little naive about marriage and financial expectations, so picking on him has provided a lot of entertainment for the rest of us lately. In today’s show, we thought we would let you guys in on the fun and talk about the biggest financial mistakes couples make as well as some of the financial benefits that come along with marriage.
Some quick facts about marriage:
– The average engagement time: 13.8 months according to WeddingChannel.com and 15.4 months according to TheKnot.com
– Average wedding cost: $26,500 in 2011 according to Brides magazine
– Average net worth for married couples in 2004: $144,500
– For single males: $28,100
– For single females: $30,026
6 Financial Benefits of Marriage from MSN Money:
- Save money on car insurance
- Raise your credit score (if you enter a marriage with someone who has a higher score than you do)
- Get favorable loan offers
- Increase financial stability (due to having more than one income)
- Combine expenses
- Share employer benefits
The Six Financial Mistakes Couples Make according to smartmoney.com:
- Merging the finances: Everybody is different. While some couples prefer joining everything, some prefer to keep everything separate, and others have found success by doing a hybrid of the two. Before entering a marriage commitment, decide what it best for you and your future spouse.
- Dealng with debt: Rather than pointing fingers at the one who accumulated student loans, a mortgage, etc., work to develop a plan to tackle it together as a couple.
- Keeping spending in check: Be realistic and develop a budget to ensure that each person is comfortable with the spending arrangement. One spouse may spend more on day-to-day items, while the other likes to splurge on electronics and hobbies.
- Investing wisely: Statistically, men are more willing to take financial risk than their wives. Rather than fighting about it, become educated together about the appropriate amount of risk tolerance for your goals and time frame.
- Keeping money secrets: Cheating in a marriage does not only apply to sexual fidelity – it can also apply to financial fidelity. This survey showed that 36% of men and 40% of women have at one point lied about the price of a purchase. You also commonly hear about couples hiding money from each other is secret accounts. The best way to avoid fighting about finances is to always be completely honest and transparent with your spouse.
- Emergency planning: This is a core concept of financial planning and one of the first things you should establish together as a couple. Having these funds as a back up will eliminate a lot of the stress that leads to fights about money.
Additional tips for a happy marriage:
- Disclose your assets to each other
- Disclose your debts to one another
- Set joint financial goals – how much to save, when to retire
- Develop a full financial plan – insurance needs, estate needs, retirement goals
- Create a budget
- Decide who is going to manage the finances day to day
- Set up a time to review your budget each month or each quarter
- Develop a method to organize your personal documents and retain financial information for your taxes
- Update your insurance policies and beneficiary designations on all accounts
To sum it up, marriage can be one of the most challenging, but rewarding experiences you will ever have. Do not let financial matters be the thing that comes between you and the one you love. Always try to treat one another with respect and be honest and you can certainly make it last. Please join us (all joking aside) in wishing Bo and his future wife happiness and a long, loving life together. He also welcomes any additional marriage advice you may have, so you can write to him below, send him an email at [email protected] or post on our Facebook wall!