For many newlyweds, the honeymoon ends when the bills begin to arrive. This is especially true if either spouse entered the marriage with financial commitments such as car loans, student loans or alimony payments. Suddenly one wedding vow, "for richer or for poorer," takes on new meaning.
One key to a richer marriage is making sure that your approaches to spending and saving are compatible. Since no two people are alike, some compromise may be in order. Before you make a sizable financial decision, you should both agree. But only the two of you can determine what "sizable" means.
In tying the knot, you have to loosen the purse strings - it's no longer his or hers, but ours. Both spouses should be familiar with the month-to-month state of the family's finances.
Decide who should pay the monthly bills, such as rent or mortgage payments, utilities and credit card bills. This spouse should handle the household checking account. With one person paying the bills, there is less chance of unrecorded checks and costly overdrafts. The other spouse may require a separate personal checking account or ATM/debit card.
You should also agree on your financial goals. Determine what those goals cost and prioritize them. For example, do you want to have children? If so, when? Will you continue for an advanced degree? When do you expect to buy a home?
With your financial goals set, create a household budget. If possible, pay fixed monthly obligations, such as mortgage, utility bills and cable TV with automatic transfers from your bank account. You'll simplify bookkeeping and avoid late payment penalties. If you use ATM cards, keep receipts so you can balance your statements at the end of the month. If you have too much month left at the end of your money, re-examine your budget.
Documents, such as a Social Security card, driver's license, insurance policies, bank accounts, deeds, vehicle titles and wills should be changed to your married name. You may also want to change your payroll withholding because the marriage penalty can result in higher joint taxes.
When shopping for a bank, ask for a list of their services, interest rates and fees. Checking account fees vary widely and can include the cost of check printing, check processing, ATM fees and charges if your account balance drops below a specified amount. Your credit card choice should take into account the annual percentage rate, fees, late payment charges and the grace period before your purchases incur finance charges.
Create an emergency fund to cover six months' living expenses. Then, you can save for other goals. To make saving easier, have your paycheck automatically deposited at the bank or credit union with a portion transferred to savings.
In many marriages, it's ''til debts do us part." As a rule of thumb, the Consumer Credit Counseling Service, says your debts should be less than 15 percent of your take home pay (not including mortgage payments). Each of you should have a credit card in your own name so that you both establish a credit history.
Pay off the balance every month.
There are several kinds of insurance to consider, including disability, liability, health and life insurance. You may have some insurance coverage at group rates through your employers. If so, review these plans to see if dependent coverage makes sense, or if you have duplicate coverage. Chances are, you need individual coverage to supplement what you have through your employers.
Every self-made millionaire began as a 'thousandaire' with the idea of investing regularly. The key is discipline. Successful investing takes time, not timing. Equally important is the concept of diversification as a means of spreading your risk. Consider putting a set amount, such as $50 a month, in a mutual fund indexed to one of the broad market indicators such as the S&P 500.
Chances are, you will have to provide more of your retirement income than your parents did. Social Security probably will not exist in its current form and you may live longer, possibly spending as many years in retirement as in the work force.
If your employer has a 401(k) plan, participate in it. If you're self-employed, consider a Keogh plan. You can also set up an IRA. Money set aside in these plans avoids taxation until you retire, which allows the earnings to compound faster. When your retire and make withdrawals, you'll probably be in a lower tax bracket.
For other financial topics, visit my Web site at www.talkingaboutmoney.com
Jim Larranaga is executive vice president of Priority Publications, a Minneapolis-based publisher of financial newsletters.