Women who say they let their husbands handle all household income and expenses may be making a big mistake that many will pay for later. Likewise, men who leave money matters to their wives may also short-change themselves. In every marriage, both husband and wife should understand how much money comes in each month and where it goes. If not, trouble is likely to erupt. In the event of divorce or death of a spouse, money miseries are almost guaranteed.
Agree on money management before marriage Since about half of marriages end in divorce today, it’s not a bad idea to start with a pre-nuptual agree- ment that allows each person to protect their personal assets. As people marry later now, each partner has accumulated some valuable assets, such as savings, investments or property. Engaged couples may also be advised to take steps like these to protect assets earned while still single:
- Start a living trust to designate where your pre-marital assets should go in case of death or incapacitation.
- Keep your own Individual Retirement Account (IRA), separate from your spouse, and continue to contribute the maximum amount allowed by the Internal Revenue Service (IRS).
- If your employer matches the amount you put into your retirement account, contribute enough to reach the full amount along with your employer’s share. Never turn your back on free money!
- Start separate savings accounts for personal emergency funds. Your spouse may not recognize things that make life miserable for you . . . like living with worn out flooring or run-down furniture, or they might not appreciate your lifelong desire to earn a PhD. Agree on how much each puts into their separate account.
Taking such steps ensures that you won’t find yourself left without resources if disaster strikes. There are also a few things the two of you should do as a couple:
- Be aware of all your family assets and liabilities; set short- and long-term financial goals and objectives.
- Learn how to invest savings wisely, selecting a variety of investment types vs. putting your “all your eggs in one basket.” Whether you decide on stocks, mutual funds, bonds, real estate, etc., do your research before you buy. Google or ask a financial advisor to explain your options to both of you. Agree on your choices.
- Choose a home (your biggest investment) X with sound structure and good resale value in an up-and-coming location, but avoid overspending on improvements that won’t pay off when you sell.
- To make sure you have extra cash to invest, both husband and wife should agree to buy only what’s needed.
Manage Your Money . . . financial facts for a brighter future provided by
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Ronald Van Surksum, CFP
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