In a relationship, it is important that both parties face financial planning decisions as a team. But this is often easier said than done.
During this peak wedding season, there are a few conversations about money and finances that many couples should have before matrimony.
Olivia Pierce, a licensed professional counselor and financial readiness program manager at Army Community Service, said
“Couples come to the table with a lifetime of thoughts and feelings about money. So, it is a delicate topic,” Pierce said. “According to the American Psychological Association, finances and relationships remain the top two stressors for couples. I am grateful I had years of clinical experience as a licensed professional counselor before practicing as an accredited financial counselor. Mismanaged finances strain marriages and financial distress is often cited as cause of divorce. One author said it best that instead of our vows containing the words ‘till death do us part,’ they should include the words, ‘till debt do us part.’”
She said there really is not a difference how way younger couples and older couples approach financial planning.
“I have seen younger couples start out with more promise than seasoned couples and vice versa. Age is not a buffer; maturity is. So the younger you are, the more years you must build the eighth wonder of the world – compound interest. Finances should not keep couples from taking the plunge into matrimony. With a little guidance, anyone can learn how to navigate this tricky hotspot in a marriage,” she said.
Pierce said couples can build financial wealth by assigning every dollar a job in their spend plan, including emergency savings; increasing the time between when money is earned and spent; saving for and treating retirement as a layaway plan; and setting the standard at living below their means.
Pierce said she is enthusiastic about utilizing her depth of experience in her role, providing premarital and marital guidance to couples seeking her expertise. She emphasizes that couples should be mindful of any red flags prior to entering matrimony. Addressing any issues will be tough, but necessary.
“Do not enter a marriage with significant debt (not including a mortgage). A little debt, like a reasonable car payment and student loan is fine, but a large amount of debt is a red flag. Share this article and discuss it with your significant other,” she said. “Set a standard of living before you say I do and ‘buyer beware’ of what you are saying I do to. You both need to remove the financial veils before removing the wedding veil, which means disclosing what’s on each other’s credit reports available for free at www.annualcreditreport.com.
“When counseling, I also start with a focus on financial well-being. Each one of us will define that differently. Take the free test at https://finred.usalearning.gov/FWBA/DigitalTool,”
According to Pierce, without intervention, most married couples budget individually. Through marital or premarital counseling, they develop a spending plan that infuses both values, personalities and goals. She suggests couples read “Smart Couples Finish Rich” to learn more about this.
Pierce shared some tips about financial management to help couples navigate through the murky waters of love and money together.
How does a couple get on track with budgeting after they have spent all their resources on their wedding and honeymoon?
“It is hard to recover from such a huge expense, so assess your budget and values before you start signing contracts. My husband read ‘The Millionaire Next Door’ before he asked me to marry him,” Pierce said. “He simultaneously fell in love with me and the idea of living below our means. I honored how important this was to him, and because I never had grand wedding plans, we jointly decided to elope. That gave us more money to save for a home that we purchased six years later. We also decided to delay our honeymoon for one year to celebrate our first anniversary. I am not saying this is the only way. Our budget and values are different than yours. Ask yourself the questions, what are the opportunity costs associated with a small, medium, large or no wedding at all? What will you gain or lose?”
How much money should a couple have when starting out together?
It is not a question on how much money a couple should have when starting out together, but more a question of how much “money sense” a couple should have. In, “The Talk: About Money,” the author explains that young adults can set themselves up for a lifetime of financial security by making 70% of their income their 100%. That means they set their standard of living at spending 70%, saving 20% and giving 10%. It never matters how much you bring in. It always matters how much you do with the money you have brought in.
How can couples deal with the challenge of having different financial languages?
“When I provide premarital or marital financial counseling, I start with a financial personality assessment to draw out individual money beliefs or scripts,” Pierce said. “How they watched their parents manage money and how they were positively versus negatively impacted by those choices shapes their worldview of money. This greatly impacts a marriage. Drawing out that information assists in debunking myths, challenging generational footholds, and bolstering sound financial practice. This facilitates a process for couples to learn how to speak the same language.”
How can couples best deal with their financial differences?
“Words, hurt; so the first step is to reframe or redefine terms. ‘Spender’ versus ‘saver’ sets up a ‘me against him or her’ mentality,” Pierce said. “Sure, each person has their blind spots, but we want to move from a negative to positive connotation. I do this by asking each person what needs the spending or saving behavior satisfies. For example, as a spender, I get to celebrate life and honor the people I love most (e.g., birthdays, holidays, anniversaries). This means I am a ‘celebrator,’ not a ‘spender.’ Likewise, my husband’s saving ensures his family is well cared for during and after life. This means he is a ‘defender.’”
What are some differences between military and civilian couples regarding financial planning?
Military servicemembers have several free programs that are available to them from day one (tax services, estate planning, legal advice, financial education, etc.). Civilians must research and contract for these services outside the installation. Military servicemembers also benefit from the Servicemembers Civil Relief Act, GI Bill, and several other paid benefits and entitlements that will greatly impact how they pay down debt and save for the future. Also, Army Community Service’s financial readiness program is a free program for active duty, reserve, national guard military service members and their families. There is also the added benefit and entitlement of the new financial literacy Common Military Training. Soldiers can learn about financial matters at each developmental stage of their military career (initial entry, first permanent change of station, first deployment, marriage, first child, vesting in Thrift Savings Plan, etc.). The Department of Defense contracts personal financial counselors to share in the load, but these knowledgeable advisers are only available to military personnel, their families, and transitioning retirees within six months of leaving military service. At Redstone, DOD civilians and military retirees are also eligible to use the free financial counseling, classes, and podcasts Pierce provides.
For more information, call the financial readiness program at 256-876-6299 or 256-876-5397.
Social Sharing