Build a Sturdy Financial Foundation Before Walking Down the Aisle

Imagine a world where couples could disagree about money but never fight about it.

Let's start with a disagreement. He wants a 70/30 stock/bond allocation. She wants 80/20. He wants to put more down on a house, but she wants to be able to put those funds to work in the market. These are conversations and disagreements about how existing money is allocated. For the most part, those are disagreements that can end in shared compromise or in a decision where neither spouse feels eaten up about a decision that didn't go their way.

Now for the fighting. The credit card bill arrives. The balance is higher than what they have in their checking account -- again. As they each look through the transactions on the bill, they notice a pattern in their spouse's spending, and they feel a responsibility to bring it up so that they can fix the problem.

Early in our marriage, my husband and I would find ourselves frustrated by "our" messy house, but my husband, in a moment of clarity, pointed out that he was more bothered by my things lying around than his own. It was harder for him to tolerate the form and behavior of my messiness than his own. I started to realize the same thing happening in my own brain. We both adopted habits to fix it.

So, it would go with the mess of the credit card. It's a mess. Both people know it. But it's the other person's messiness that seems somehow worse or less justifiable than their own.

Unfortunately, what might have started out as one spouse trying to helpfully educate the other on where they went wrong gets into a really big fight, really fast. Unlike untidy habits which don't have too much baggage and can be fixed, money comes with lots of emotion.

Unfortunately for our couple with their first fight, they might find themselves in a spending war in defiance, or secretive spending in shame. We know these cycles that keep popping up in their heads weigh on relationships, even healthy ones, and might ultimately break them.

But really, folks, are we surprised? Marriages these days don't exactly start off on the strongest of financial footings.

Take a common conversation when people find out I wrote a financial book for young women -- first, there is the furtive glance to the right. Then to the left. Then the lean in (pre-covid of course). "Someone needs to do something about these weddings." The section on weddings in my book is still the most frequently mentioned sub-chapter. And let's be clear: Neither I nor my book is anti-wedding, proof of which is that my husband and I own a venue often used for weddings. As a vendor in the industry, maybe I am part of the problem, but does it help that we gift each happy couple a signed and personalized copy of "But First, Save 10" as they exit the venue?

I still remember one particular moment learning of a young, engaged couple in a lot of debt. There was the credit card debt, the student loan debt and then a debt I had never heard of before -- the engagement ring debt. I soon saw it more as the rings got bigger and more sparkly -- a reflection of the arms race, or in this case the "finger's race," of engagement rings.

If we are starting out playing with fire, why are we so surprised when marriages burn down? A recent Harris Poll on behalf of Ally Bank found that money was the largest stressor for couples, cited in the top reason for stress by 36% of respondents. Finances are commonly cited as a top cause of divorce. But it doesn't have to be that way. Newlywed couples are so in love and so willing to do anything for each other early on. Imagine all the good that can happen when a couple makes sturdy financial choices early on to build for their future. Gosh, I would have lived in a tent with my husband if I had known it would have been good for our marriage.

Instead, newlyweds seem to be choosing a precarious path of debt or living paycheck to paycheck. The choice means they are kicking that can of potentially tough financial decisions down the road to potentially coincide when their marriage hits that bump.

Preparing for this piece, I asked my husband about engagement rings. How did he know what to spend? Did he research it? While he did not follow the advice, he told me that when he was buying my engagement ring the advice offered to him in the shopping process and confirmed from Dr. Google was that you should spend 2x monthly gross income.

Whoa -- shouldn't the advice be to buy what's affordable?

Let's go back to our couple in debt and assume the young man made $45,000 a year. Assuming he listened to that retail "rule" he would have spent $7,500 on that ring. If he financed it at a 7% interest rate, then that's about $230 a month for 3 years, a small car payment. Plus, the credit card debt payments. Plus, the student loan payments.

I think we can agree that this is not the best way for this couple to start a life together.

What if we as the village -- the parents, grandparents, aunts, uncles, friends and mentors -- inserted a little sanity into the wedding planning process? What if instead of the buildup to marriage being hyper consumption from the ring to the flowers to the photographer to the, ahem, venue, there was a little conversation about a nest egg for this new nest they are creating together? Even if the parents are paying for the wedding costs, can we wedge in a little time to encourage the couple to do some financial planning?

ONE-ROOF OVERHEAD

Here's my perfect world for newlyweds. If you are getting married and moving in together at the same time, something extraordinary is probably about to happen. It's called overhead efficiencies. It's why companies merge. They can rid themselves of duplicative expenses. I think about opportunities, financially, to get ahead if couples simply merged their lives into one of their existing spaces, like his or her apartment or house. And if they just lived that way for a couple years, what could they accomplish?

• Debt repayment: Your debt is my debt is your debt, but that debt will start to eat away at our relationship. Before we say "I do" let's get it all out on the table. What better time than when we are at the peak of romantic love to agree to live in a tent to pay off our debt, if that's what it takes to pay it all off?

• A nest egg: aka, the emergency fund. This is an investment in a relationship. An emergency fund is buying both people the freedom from fear as those unknown expenses hit a fragile new relationship (new car tires, IRS surprise bill, anyone?).

• Retirement: Imagine a world where a young couple scoots their savings rate to 10% and then never looks back. That means when they are in their 30s or 40s with kids and have expanded to a bigger house and bigger lifestyle, they will not have to then downsize their life to get their retirement to 15%-20% to try to catch up for the retirement train barreling down the tracks at them.

• A cash management system: Wow, this costs nothing, and imagine how much easier a cash management system between two newlyweds would be to implement when there is more money freed up from overhead efficiencies.

This week a new Netflix series called "Marriage or Mortgage" debuts. Couples will have to choose between the big wedding or a house. From what I gather from the trailer, a professional wedding planner will entice them to choose the wedding and a real estate agent will try to convince them to choose the house. I guess "Over-the-Top-Wedding or Save 10% for Retirement" or "Massive Wedding or Be Debt Free" wouldn't be catchy titles or make for dramatic plot lines. How unfortunate.

This content originally appeared in my “Save Yourself” column in the Arkansas Democrat-Gazette: https://www.arkansasonline.com/news/2021/mar/09/build-a-sturdy-financial-foundation-before/ 

Photo by Marc A. Sporys on Unsplash