Q: My marriage is soon and we have issues regarding personal finances. Does BBB have advice for taking control of personal finances and money management for newlyweds?
A: Marriage is an exciting time for a couple. However, once the honeymoon is over, it’s time to sit down and get serious about your finances. After walking down the aisle, Better Business Bureau advises newlyweds to take control of their money or risk a rocky financial future.
According to research by Utah State University, married couples who frequently fight over money are more likely to split up. Even when compared to frequent fights over other issues — such as chores, sex and in-laws — fighting about money was a better predictor of a future divorce.
When considering your financial future, it’s important for newlyweds to realize that they are in it together and managing their finances can be a rewarding experience-and not just a source of frustration and fights. Have this conversation early, rather than later, so that you can develop healthy personal finance habits together.
To start your new life together on the right financial foot, BBB offers the following advice:
1) Let Financial Skeletons out of the Closet — After marriage, any personal debt becomes “our debt” and it’s important to sit down early on and discuss what outstanding obligations exist on both sides, including car loans, school loans and credit card debt. Review your credit reports to get a better idea of what you are both bringing to the marriage.
2) Build a Budget — After you have a grasp on your debt, it’s time to build a monthly budget. Look at your monthly bills to create a realistic picture of how you spend. Discuss your long term goals — such as buying a house or car and having kids — and figure out how much money you need to set aside every month to reach those goals.
3) Designate a Driver but Travel Together — To avoid confusion, one person should be assigned to paying the bills every month. This does not mean that the other person takes a backseat role in managing the finances. Have a discussion at least every month about your financial progress in order to map your path and identify any bad spending habits.
4) Plan for Emergencies — Many young couples fail to save money to get them through hard times such as health problems and unexpected unemployment. Experts recommend you set aside three to six months of salary in a rainy day fund, ideally an interest-bearing account that can be easily accessed.
5) Save for the Future — Retirement may seem a long way off to newlyweds, but setting aside money now means reaping big rewards later on. Take advantage of both employers’ retirement matching programs, if available, or set up individual retirement accounts.
6) Make a Vow to Be Savvy Consumers — Many families have had their life savings decimated after becoming a victim to fraud or identity theft. Check out your BBB’s website to find trustworthy businesses, get educated on the red flags of fraud and learn how to protect your identity.
For more advice on managing your money, www.bbb.org/us/consumer-tips-finance/.
Get answers to your questions each Friday from Jim Winsett, president and CEO of the Better Business Bureau Inc., which serves Southeast Tennessee and Northwest Georgia. Submit questions to his attention by writing to Business Editor John Vass Jr., Chattanooga Times Free Press, P.O. Box 1447, Chattanooga, TN 37401-1447, or by e-mailing him at jvass@timesfreepress.com.