Do you remember when a ten-dollar bill felt like a thousand bucks? Do you remember going out to eat with adults and not even thinking about how much the meal cost? Do you remember gleefully opening birthday presents without worrying, “Wow, I hope they did not spend too much on this!?”
Not too long ago, Mom and I watched an old VHS of my 1991 piano recital. After the music faded and the cake came out, I opened some presents from my parents. I was horrified as I watched my unimpressed face open one item after another. They were not extravagant gifts, but they were gifts from the goodness of my Mom’s heart. As the camcorder rolled, I opened a present, tossed it aside, said a pitiful “Thanks, Mom,” and moved on to the next gift. My thirty-six-year-old self wanted to go back in time and shake that ungrateful nine-year-old!
Thanks to my Mom’s efforts, I outgrew that bratty attitude. She taught me the value of a dollar before I left home. I shudder to think what I might be like today if that entitled nine-year-old had be allowed to grow into an entitled adult. Had I grown up getting everything I wanted, not having to work, and not being confronted for my attitude, my marriage would be suffering for it – if Eric had married me at all.
Money is not just money. How a person interacts with finances, possessions, and gifts says a lot about their character and expectations.
In the decade-plus that Eric and I have been working with couples, managing money is one of the hot topics which comes up as eager men and women prepare to join their lives together. Let’s face it, most couples want to talk about sex more than money, but money is a concern which touches almost every blushing bride and anxious groom.
During this year of focusing on hindsight, we would be remiss not to review the financial advice we have given which has greatly impacted our lives and our couples’ lives! And focusing on that hindsight review, below is a compilation of over a dozen previous posts we’ve written on money – the best parts taken from each and consolidated into one post. As a result, this post is longer… but, it’s worth it! ~smile~
Here are twenty financial tips for engaged (or almost engaged) couples!
Part One: Get on the Same Page with Money
- Help Divorce-Proof Your Marriage. The habits we develop early in our marriages are extremely hard to break because they create our standard of what we consider normal. Though finances are not the only piece of the happy marriage puzzle, they are indeed a large piece. Financial concerns cause stress, and stressed people tend to argue or withdraw. Too much negativity around this issue starts to wear down both parties. Financial problems are one of the main reasons couples list for pursuing divorce. If you go into marriage with a solid financial plan (e.g., budgeting, not spending more than you make, saving, etc.), you can likely avoid one of the main struggles couples face.
- Delay Instant Gratification. For some, this is natural. My brother-in-law can delay getting something he wants for years. My mom can too! I can delay gratification in some ways; and, in other ways, I struggle. I can save months for an item I want, but when I want candy, I want it now! When I was younger (back when the bulk of my heavy shopping was in dollar stores), Mom taught me to put what I think I want in my cart and walk it around the store for a while. It was amazing how many times the items in my basket lost their appeal in a matter of fifteen to twenty minutes. Sometimes, I left the store with nothing – nothing, that is, except all my money! To this day, I put impulse merchandise in my cart, walk it around, and then often return it to the shelf where it belongs. It is like owning something for a few minutes and then getting my money back. ~smile~ Instant gratification can kill a marriage in no time. We live in a now-focused society, but relationships do not function that way. Giving in to financial purchases whenever we feel an urge is not helpful behavior applied to relationships. If you cannot say no to the instant gratification of stuff, can you say no to affairs? That may sound like a stretch, but is it? Being able to delay gratification is a sign of character and maturity.
- Take Some Time to Learn About Money. You do not need to be a financial genius to be a good husband or wife; but, having some understanding of money management will be a huge blessing to your spouse and children. If your significant other could not care less about managing money and refuses to take an interest in learning how to manage it, are you sure he or she is mature enough for marriage? (Probably not.) We are not saying both of you must love dealing with finances, but if either of you refuses to take part in the process, there will be trouble. Also, be cautious about where you get your financial information. Not all “experts” are financially sound experts. We trust Dave Ramsey and others who teach financial concepts from a Biblical standpoint. Before tying the knot, make sure to obtain a basic understanding of:
- The Process of Buying a Home and a Car
- How Credit Really Works (e.g., paying interest, dealing with creditors, etc.)
- Thoroughly Discuss Giving. Giving to others can be such fun. A few years back, Eric and I gave our server a large tip and the smile on her face is etched in my memory. Another time, Eric and I agreed to give money to a friend who was in crisis and wanted to visit a family member. Though she appeared to thoroughly appreciate the gesture at first, days later she started backing away from me and our friendship fizzled. Giving is one of the biggest blessings in life and more fun than a season pass to Disney World, but giving is not the best decision in all circumstances. Consider the following questions when deciding whether to give a monetary gift:
- What is my heart motivation for giving?
- Does the potential recipient have a pattern of making wise financial decisions?
- How might this gift impact (positively or negatively) my relationship with this person?
- Can this gift be given anonymously?
- Am I causing myself or my own family financial hardship by giving this gift?
- Have I prayed about this decision? Do I feel prompted to give in this situation?
- Would this gift truly help this person, or simply enable unhealthy behavior?
- Is my significant other on board with this decision? Why or why not?
- Be Sure You are on the Same Page with Money Before the Wedding. To be on the same page does not mean you must have identical beliefs; but, for a peaceful marriage, both partners should be heading in the same financial direction. If you are determined to give 50% of your income to your aging parents and your significant other is completely opposed to this plan (or moderately opposed… because ‘moderately’ will grow to ‘intensely’ after marriage), you two are not going to be in unity once you are married. Not only that, but resentment will grow until one or both of you shuts down. Eric and I are not carbon copies of each other by any means. If left to my own devices, I would spend our electric bill money on gifts and our savings on eating out. However, we agreed early on that we would live by a budget and that we would both agree on the budget. Have some financial discussions and observe each other’s monetary habits before you enter a marital covenant with each other. Consider the following questions:
- How did my parents handle money when I was growing up? (Which of their financial behaviors do I want to adopt and which do I want to discard?)
- On a scale from 1-10, how important is managing money to me? (Explain your number.)
- What expectations do I have of my future spouse regarding money and money management?
- What are my beliefs regarding debt? How much debt does my significant other have?
- What are my beliefs regarding giving money (e.g., tithing, offerings, giving to those in need, giving to family, etc.)? When is it good to give and when is it prudent to withhold?
- What are my views on lending money… to family? … to friends? … to anyone else?
- What do I believe about the concept of building wealth?
- If I suddenly had $100,000,000 USD, what would I do with it? (This is a fun date question. Grab a notepad and have a blast. You can learn a lot about each other with this exercise.)
Part Two: Get Out of Debt and Stay Out of Debt
- Follow Dave Ramsey’s Baby Steps. Following Dave Ramsey’s Baby Step plan may seem daunting in the beginning, but you will be glad you did it! We certainly are thankful for Dave putting together this financial plan! It has helped us and millions of others, it can help you too.
- Step One: Save $1,000 dollars (and hide in a safe place to be able to get to quickly in case of an emergency).
- Step Two: Pay off all debts starting with the smallest balance regardless of interest rate (all debts, excluding a first mortgage).
- Step Three: Save three to six months of expenses (not income, but expenses) into a fully funded emergency fund (this will often be around $10,000 to $15,000).
- Step Four: Invest 15% of your income into retirement (an employer match does not count as part of the 15%).
- Step Five: Begin saving for your children’s college expenses (skip this step if you do not have children and return to it once you do).
- Step Six: Pay off your house early!
- Step Seven: Build wealth in order to invest, give, and have fun (spend).
- Get on a Budget. Are you already on a budget? Not a mental budget, but a written budget. Is your significant other? (If not, that is not reason for concern.) However, whether you and your partner are willing to create and live on a marital budget (and actually do it) is what matters. The best way to gauge whether someone will stick to a budget in marriage is if he or she will stick to a budget before Start personal budgets now and get used to living on them. Once you are married, create a household budget with both incomes. A shared budget means shared goals! As you prepare for budgeting, get acquainted with the following concepts:
- Nerds and Free Spirits: Which one of you is more into the numbers and graphs of finances and which one of you is more free-spirited? Both can be wise with money, but the nerd is typically more suited to create the spreadsheet budget while the free spirit maturely participates with suggestions after the spreadsheet is built.
- Zero-Based Budget – Every dollar you make is allocated into the budget. Some can be set aside for a trip, a meal out, or some other form of entertainment, but it is important that it is still accounted for in the budget.
- Budget Committee Meetings – Before each month begins, couples should look over the budget and update it to reflect the following month. Free spirits do not last long at these meetings (I know from experience!), so it works best if the nerd creates the budget (e.g., updating the spreadsheet, creating a new tab in Excel, etc.), and then the free spirit looks it over and makes at least one, mature change. This transforms the budget from his/her budget, to our Once each person has given their input and adjusted the budget accordingly, the couple then agrees to live on their budget. Any alterations should be agreed to and updated in the spreadsheet by both parties – before undocumented purchases are made – to maintain order, trust, and financial fidelity.
- Focus on the Debt Snowball. The debt snowball is step two in Dave Ramsey’s financial plan. Individuals and couples are often inspired to save a thousand dollars for the first step, the Baby Emergency Fund; but, once they then face their debt, fear or frustration can take over. If you use Ramsey’s debt snowball method and refuse to give in to discouragement, you can watch your debts disappear… one right after the other. Dave strongly recommends paying off your smallest debts first – even if the interest rate is higher on the others. It may seem counterintuitive, but it is coming at your debt psychologically (instead of mathematically). There is a joy to winning. Paying off that first debt is like losing that first ten pounds. It fuels you up to pay off more. The money you were using to pay that smaller debt can then be added to your next smallest debt. As you pay off debts, the snowball picks up more snow and more speed. Before you know it, you have a large sum of money available to throw at your largest debt until it is history. Eric and I did this when we were in debt and highly recommend it! Paying off debt is a rush.
- Buy Used Cars. If you are concerned about social status and social approval, consider buying a newer-ish used car – two to four years old – instead of a brand-new car. You will still look classy and your bank account will not suffer nearly as much! Losing around 25% of their value after just driving off the car lot, new cars are not worth the loss of your cold, hard cash. Instead of buying a car on credit, pay yourself a car payment every month. Once you have the money, go buy a nice used car outright. No interest. No change in your monthly bills. Start saving towards your car before you need a new one. It may be hard to believe, but something as simple as how you shop for cars can be the difference between living in debt or retiring rich. Wondering how that is possible? Watch Dave Ramsey’s short clip Drive Free Retire Rich!
- Find Small Ways to Cut Costs. Several small cost-cutting endeavors add up to a lot of savings! Savings which can go towards your debt snowball, your emergency fund, and eventually, your investments! I grew up with Walmart bags lining the trash cans. We already had them and they worked just as well as trash bags. My Mom still has the silverware she’s been using since the 1970’s. Eric uses and reuses plastic flatware at work. Once it is washed, it is as good as new! Turn off lights. Find cheap recipes. Put filtered water in your shampoo bottle to get out that last little bit. We’re not saying to obsess over these changes, but make it a personal challenge if you can – a game.
Part Three: Future Planning
- Ask Yourself “Will I Be Glad I Made this Financial Decision in Ten Years?” “For the love of money is a root of all kinds of evils” (I Timothy 6:10, ESV). This is very true; however, the lack of money is a root of much marital discord. One easy, self-counseling question you can always ask when in doubt is: “Will I be glad I made this decision in ten years?” It is a good question for a great many decisions, purchases included. Is buying this SUV a transaction I will be glad I made in ten years? Probably not. I will look for a less expensive vehicle and save my money. Will I be glad I went on this vacation in ten years? I think so. We have the money set aside, it is a place we both want to go, and I think the memories will be priceless. The question is a quick and easy help for those difficult decisions. You can also create a vision board with pictures of items you want to buy and vacations you want to take as a motivator to stay on track towards your financial goals.
- Resist the Pressure to Buy a Home too Soon. So many newlywed couples entertain a barrage of comments from well-meaning family and friends. “When are you going to buy a house? Renting is throwing away money.” Before long, these couples are tying themselves down to a house long before they are financially ready. Rent may feel like throwing money away, but Dave Ramsey refers to renting as patience money. Renting gives you a chance to get organized… to decide where you want to settle. A lot of growing (hopefully) happens in the first year of marriage and you may arrive at some alternate conclusions after being together for a little while for where you want to live and how close to family members or workplaces. We want to live closer to work. We need to live a little further from our parents. We hate the train waking us up every night! Home ownership also comes with extra costs which renting typically does not, such as lawn care, replacing appliances, water heaters, roofs, and fixing everything. You are the maintenance person when you own the home. ~smile~ So, we recommend finding a reasonably priced apartment or house to rent while you save a 20% down payment for your future home. Putting 20% down allows you to avoid paying PMI (private mortgage insurance).
- Invest! But, wait until you have all your consumer debt paid off (not including a first mortgage), and three to six months of expenses set aside. Step four of Dave’s baby steps, investing for retirement, is incredibly important. Why? Because I was twenty-two last week. Then, I woke up and suddenly I am thirty-seven. Time goes by quickly and the longer you invest, the better chance you have of retiring comfortably. We recommend finding an investment firm which shares your values and is willing to explain everything until you understand. If they do not have the heart of a teacher, they do not need to be trusted with your investments. It is your money. It is okay to fire a haughty investment broker. ~smile~
- Tithe! Perhaps the concept of tithing seems a little out of place in the future planning section, but it is not here by mistake. Tithing is an important part of the Christian life and so many believers have stories of how their financial outlook changed once they started faithfully tithing. When my grandparents were young and broke, they never had enough money. One day, my grandfather decided he was going to start tithing. Grandma agreed, and before they knew it, their money began stretching further and further. We do not tithe for God’s blessings. We do it as an act of obedience and worship. It is the one time in the Bible God said, “Test me.” “Bring the full tithe into the storehouse, that there may be food in my house. And thereby put me to the test, says the Lord of hosts, if I will not open the windows of heaven for you and pour down for you a blessing until there is no more need” (Malachi 3:10, ESV). Tithing is a key step in preparing for your future. My grandparents never had wealth beyond their wildest dreams, but they never went without; and, when the time came for Granddaddy to retire, he took on another job because he wanted to continue tithing. ~smile~
- Invest in Your Children. Recently, I spent the evening with my friends’ and their three young children. They giggled, played, and took turns vying for the adults’ attention. Looking at those little faces, it is hard to image them all grown up and starting a life of their own. But, in only thirteen years or so, that is exactly what is going to happen. Children are the future and if God blesses you with little ones, teach them about money. Show them the strong connection between work and financial gain. Teach them about taxes. When they are old enough, show them how to balance a budget or checkbook and make sure they do it monthly. Let them see you pay bills and answer age-appropriate money-related questions. A parent can rest a little easier when they know their children have enough money and the financial skills to take care of themselves. Plus, providing for adult children will cut into your retirement funds quickly.
Part Four: Have Fun with Money Once You Are Financially Stable
- Plan a Dream Vacation! When your friends are taking off on all kinds of adventures, it is easy to give in to jealousy. It is common to think, “but, I deserve…” It is a harsh truth, but like Dave Ramsey says, “You don’t deserve anything if you cannot pay for it.” I have come to loathe the word deserve and the havoc it creates. None of us are immune. We all have moments when we look at our neighbors and think, “I work a ton harder than he does! How can he afford a new car?” Yet, a quote we should all commit to memory is this: “The road of comparison always leads to disappointment.” In the end, it does not matter what your sister, your co-worker, or your ex has. Focus on your Make wise choices with money. Take your life a day at a time. Save and invest wisely. Find less expensive ways to have fun (consider staycations from time to time). Enjoy the people in your life rather than the stuff. And, one day, you can plan that awesome vacation – maybe even for your entire family.
- Give to Your Heart’s Content! As noted earlier, use wisdom in your giving; but, when a positive opportunity arises, enjoy blessing others. There is nothing more fun than giving.
- Buy or Build Real Estate. Whether you want to invest in real estate, have multiple residences, or use your homes for ministry opportunities, purchasing property is a fantastic way to use your wealth. We do not recommend buying investment property if you cannot pay for it outright (yes, 100% down); but, once you can, it can be a solid investment. You can build a retreat center for church groups, cabins for married couples who need a low budget reconnection vacation, or even fund church buildings.
- Continue to Budget Even When You are Wealthy. Once you are in Baby Step Seven, it may not seem important to budget, but we encourage you to continue! It is always a good idea to know where your money is going. When you have a lot of money, budgeting is more fun. ~smile~ No brainer, I know. Keep track of your bills and budget out how much you want to spend on fun, giving, or other projects. You get poor by doing what the poor do and rich by doing what the rich do. Do the rich still budget their money? Absolutely.
- Buy Something You Have Always Wanted. Have you wanted a horse your entire life? Do you gaze longingly at underground pools (like I do)? Is there a random statue you have been drooling over for years? Once your financial affairs are in order, let yourself enjoy that item. Most people who start out with little and work their way up to financial freedom have grown accustomed to doing without frivolous wants. Write down items you would love to have someday. When you lose interest in something, cross it out. (Twenty years ago, I wanted a Mustang. Now, I have no interest in owning one.) When you complete Ramsey’s Baby Steps, allow yourself to enjoy at least one of those life-long desired items.
Money is a thread which will run through your entire life. How we acquire it and spend it may change, but it will always be present in our earthly existence. The better we plan in the beginning, the more peace we are likely to have in the end.
While you are planning and making wise choices, get creative. Just because you cannot sail around the world does not mean you cannot enjoy an afternoon in a friend’s boat or a day trip to a lake. And, remember that you can still give even while your bank account is low. You can give laughter, practical help, and companionship. Money cannot buy human connection.
There is a lot of information in this post. Revisit it in chunks if that’s helpful, but please take it to heart. Eric and I are so proud when we see our couples making wise financial decisions. In a world that says “I deserve this” and “give it to me now,” it takes character and maturity to plan for the future and delay gratification.
It is not always easy to do what is best, but it is so worth it.
“Never spend your money before you have earned it.” – Thomas Jefferson
“If you live like no one else, later you can live like no one else.” – Dave Ramsey
“Everyday is a bank account, and time is our currency. No one is rich, no one is poor, we’ve got 24 hours each.” – Christopher Rice
What are you doing now to foster financial success in your future marriage?