It is money week here at PreEngaged. Even if the topic of finances makes your snore, it is an important subject to broach with your future spouse. We do not ask that you become a financial expert (I certainly am not), but that you take a substantial interest in the basics of your personal finances for the health of your future marriage. ~smile~
Dave Ramsey says in most marriages that one person is the nerd, (i.e., the one who loves spreadsheets, numbers, facts, figures, etc.), and the other person is the free spirit (i.e., the one who loves spontaneity, fun, and doesn’t sweat the details). Some marriages have two nerds or two free spirits, but the majority of relationships contain one of each. In our home, Eric is the nerd (and, oh boy, is he the nerd). I have an “I Love Nerds” t-shirt I planned to sell at a yard sale, but he wanted me to keep it. So, he is a proud nerd. ~smile~ I, on the other hand, am a free spirit. If I was married to a free spirit, I could rise to the occasion and pretend to be a nerd. Thankfully, Eric’s nerdy capabilities allow me to embrace my true self.
Finances are not as cut and dry as two plus two equaling four. Finances reflect one’s priorities, emotions, personal beliefs, and goals. When couples get married, they not only combine their finances but also their beliefs about the use of money. If their beliefs clash, they clash. Even if a couple does not fight about money, resentment will creep in if one or both parties believe their wishes and opinions are being ignored.
While you and your sweetie are discussing the seven questions from Monday’s post, also talk about these common money mistakes new couples make. How will you and your sweetie safeguard your relationship from falling into these common traps?
- Buying a home too soon – “Renting is throwing away money!” How many of you have heard or said this? Many new couples get married, move into their tiny apartments, and then get battered by well-meaning friends and family. “When are you going to buy a house? Do not keep wasting your money on rent. You could be building equity! A monthly mortgage payment is no more than your rent payment!” This may be true, but consider these additional homeowner expenses: lawn care, broken plumbing, water heaters, roofs, basic maintenance, home taxes, closing costs, and the rise and fall of the housing market. Just because you own a home does not mean you will make a bundle when you sell. You need to do your homework first and consider several factors before jumping into a home purchase. Dave refers to renting as patience money. ~smile~ (Not a good long-term plan, but very good for a short-term plan.) I like that. Seldom am I ever happy when I make a hasty purchase. With something as magnificent as a home, it pays to be ready – having saved at least a 20% down payment to put towards a 15 year fixed mortgage (so you can avoid paying needless PMI [private mortgage insurance]). For more home purchase information, check out Dave Ramsey’s book, The Total Money Makeover and his informative class, Financial Peace University!
- Neglecting a monthly budget – <waving arms here> Please pay attention to this one! Keeping a budget may not be your idea of a good time, but overdrawing your checking account, living paycheck to paycheck, and having no retirement saved is no one’s idea of a good time either! A little budgeting now will pay off later! Going out for a night on the town is far more enjoyable when you know you are not eating away the money for your electric bill. Budgets bring peace and organization to your finances. What sense is there in hiding from the truth? See what you have – don’t just throw the bills into the junk drawer. Budget necessities first and then have fun with the remaining money. No money left for fun? Let that inspire you to make changes in your career, take on some extra work, or finally request that raise you know you have earned! ~smile~ Or, maybe you can take another look at some of those “necessities.” Maybe $300 a month for clothes is not realistic for your financial situation right now.
- Forgetting to plan for the future – A few months ago, I watched friends and family eat some of the most delectable pizza (my favorite food) our town offers. I had a weight-loss goal I was trying to reach and stuffing myself with bread would not have been a blessing to that endeavor. I kept telling myself, “Once they eat the pizza, it will be gone!” And it was. In a matter of minutes, everyone was done eating and the evening continued. They were no better off than I was for having eaten the yumminess. In much the same way, giving up some momentary pleasures to prepare for the future is not going to hurt you. Maybe you do not go to every ballgame with the guys. Maybe you do not hit every outlet with the girls. You can still have some fun, but not so much that you jeopardize your future. Have a workable plan that allows for reasonable amounts of fun (it is definitely important to have some fun – having none is dangerous… it can lead to a financial spending spree meltdown), while still setting money aside for the future. As Dave says, “Live like no one else so later you can live like no one else.”
- “Needing” a new car – Brand new vehicles lose their value in no time. Even driving a car off the lot makes the value drop around 25%! (25%!!!) It is not a sound financial decision to “invest” money into anything which always goes down in value. If you did not catch it in Monday’s post, enjoy this video, Drive Free, Retire Rich if you are still unsure about the merits of buying used cars. ~smile~
- Believing common money myths – “You have to have a good credit score.” “You need credit cards to build credit so you can make large purchases later.” “Leasing cars is a good option.” There are tons of money myths out there, and the more we hear them, the more we believe them. When I was sixteen, Mom opened a checking account for me. It seemed like a good idea, and it was! It helped me learn to manage my money. Then, at eighteen she got me a credit card. It was important for me to establish credit, right? Not so much. But, it is no surprise that she thought she was setting me up for success. Ramsey devotes a few chapters of The Total Money Makeover to dispelling money myths society has taught us. Check them out! How many of these myths were engrained in you? Discuss any new beliefs that emerge after reading the book!
If you have made money mistakes, it just means you are human and old enough to have money. ~smile~ No one is a perfect money manager; but, when choosing a mate, it is important to find someone who desires financial freedom and is willing to put in the work required to attain financial peace.
Do not let money fights and money problems cause your future marriage unnecessary grief.
“Love is grand; divorce is a hundred grand.” – Author Unknown (and probably broke)
How will you and your sweetie avoid these common financial traps?