Money Harmony for Newlywed Couples and Engaged Couples

Young married life should be a joyful time, but conflict over money often interferes. For newlyweds under the age of 30, debt brought into the marriage is the number one cause of arguments - arguments that lead to dissatisfaction and even divorce.

To avoid unhappiness and divorce, newly married and engaged couples can take steps to minimize money conflict and maximize money harmony in their relationships. If they understand the scope of the problem, adjust their money attitudes, and learn financial skills, they will go a long way toward preventing or repairing financial troubles and will enjoy greater harmony in their relationships.

Crushing Financial Burdens -- A Pervasive Problem

American couples live in a financially stressful environment. At every turn they hear or see advertisements to purchase on credit. Tempting credit card offers with generous credit limits arrive in the mail almost daily.

As Americans have responded to these appeals over the last decade or so, household consumer debt has doubled, from $1 trillion to $2 trillion. With mortgage debt included, total household debt is more than $9 trillion. That's $35,000 per American. During the same time period, personal bankruptcies rose to record levels.

Behind the statistics are millions of individual lives and marriages under enormous financial pressure. The average American adult uses up to 80% of his or her waking hours working to earn money, spending money, or worrying about money. That doesn’t leave much time for nurturing relationships, especially a new marriage.

Four Principles to Adjust Your Money Attitude

Couples have the best chance of getting their financial house in order if they first adjust their attitude. The researchers say four principles can transform your thinking toward a harmonious financial relationship with your spouse.

Principle One: Value your spouse above money. Love and good will toward one another must infuse all efforts to unify your financial life. Remember that you are married to each other, not to your checkbooks. When each of you feels loved enough to be emotionally safe, then you can communicate openly, honestly, and compassionately about money matters.

Principle Two: Be willing to grow. It's important that each of you discover your money personality and then be willing to adjust it so you can achieve harmony and meet your financial goals. Money personality refers to your attitudes and behavioral tendencies toward money. Financial problems are typically behavior problems connected with emotions, attitudes, and habits learned from our experience and family of origin. For example, changing your money personality will require effort and a change of heart. Perhaps you grew up in a family where getting what you want was as easy as asking for it, whether finances were sufficient or not. A willingness to change is essential to financial harmony in your marriage.

Principle Three: Share your vision. Explore together your core values and deepest desires for the kind of life you want for yourself and your children. How many children do you want? Do you want to invest time and money in music instruments and lessons, athletics, art, involvement in civic affairs? Do you want more time for family or more for professional achievement? Do you want financial independence at an early age so you can be free to travel or to volunteer? As you explore each other's values, begin to develop a shared vision that unites you as a couple and directs your future financial plans. Envision money as a means to help you achieve your shared goals - and thus as a tool to enhance your marriage.

For engaged couples, sharing information about debt and being willing to reduce debt before marriage should be part of sharing your financial vision with one another. Because debt brought into marriage is the number one source of marital conflict, each partner should fully disclose debts. Your future spouse deserves to be informed about debts that will become his or her own after marriage.

Principle Four: Decide to live well, not high. Develop a non-materialistic attitude that values living well rather than living high. Living high is characterized by conspicuous consumption. Living well is characterized by altruism, service, work, self-reliance, and consecration. When we live well, we view our life and resources as stewardships.

Learn Financial Skills

Once you’ve adjusted your money attitudes, you're ready to build your financial skills. Three foundational skills are discussed here.

Live Within Your Means with a Values-Based Spending Plan

The chief financial officer of a company in the Pacific Northwest has a framed poster hanging behind his desk that reads:

INCOME

MUST

EXCEED

OUTGO

This sign reminds everyone who comes asking for money that the company must spend less than it makes if it hopes to survive - and thrive. The same is true for every family. To develop a spending plan to live within your means, follow these steps:

1. Estimate your income and expenses for a month and for a year. On a simple monthly budget form, track all income and expenses for a month and total your expenses by category (food, housing, transportation, clothing, etc.).
2. List all non-monthly expenses you anticipate in the coming year, such as Christmas gifts, birthday gifts, medical bills, and car repairs. Divide these expenses by twelve and list them as a monthly expense on your budget form. This will help you set aside money for these needs so you can avoid going into debt to pay for them.

1. Determine whether your monthly income less expenses is a positive number and do the same for your yearly budget. If expenses are greater than income, then together consider sacrifices you might make and creative options to reduce expenses or increase income. Remember that income must exceed outgo. Counsel with each other and with parents, ecclesiastical leaders, and university outreach financial counseling clinics until you have a clear plan that works.
2. Find and use a simple way to track monthly expenditures by category. Many people use the "envelope method." Put your monthly food money in an envelope labeled "Food" and check how much is left as you shop each week. When the food money is gone, then you are done buying food for the month. Do the same thing for each budget item. This is a tangible, concrete way of helping you keep your spending on track. It's simple and it works. Some couples may prefer to use budgeting software or other techniques. Use what works best for you.
3. Periodically review your spending plan to see whether your budget moves you toward your most valued life goals. If money is going into payments for an expensive new car but you value financial independence in later years above the temporary prestige of a new car, then consider more basic transportation. Direct money away from the car and toward your future goals. Fast food is another category where money can be "found." People who pack a lunch often save more than a thousand dollars a year, money that can be used to reduce debt, save for a home, or invest.

Earn Interest; Don't Pay Interest

If you’ve ever been in serious debt, you know the pressure of paying interest. A classic quote from J. Reuben Clark, a former U.S. Ambassador, attorney, and religious leader, illustrates this experience. In 1937 he said:

Interest never sleeps nor sickens nor dies; it never goes to the hospital; it works on Sundays and holidays; it never takes a vacation. ... Once in debt, interest is your companion every minute of the day and night; you cannot shun it or slip away from it; you cannot dismiss it; it yields neither to entreaties, demands, or orders; and whenever you get in its way or cross its course or fail to meet its demands, it crushes you.

Reducing debt reduces marital stress and increases financial harmony and strength. Therefore a debt elimination plan is an important part of every couple’s quest for financial harmony. In fact, one characteristic of most happy marriages is a lack of debt and debt-related problems.

The "fold-down" method may be the simplest and most powerful debt elimination strategy available. It works as follows: Make payments on all your debts, and when one debt is fully paid, apply the payment you were making to the now-paid debt to another debt. This increase in payment will pay off the second debt more quickly. Continue the process until all debts are paid in full. This technique can eliminate debt in less than half the time it takes to pay off debt by making minimum payments.

Less debt means less of your money paid out in interest and more directed toward your most valued life goals, which bring peace and opportunity.

Develop a debt-averse attitude and a deliberate desire to avoid paying interest. Only use a credit card if you pay off the total balance every month. Remember the folk proverb about paying interest and you will be motivated. It states:

Interest:

Those who understand it earn it.

Those who do not, pay it.

Save and Invest

It’s important to save and invest. It's also important to have emergency savings. Therefore we recommend the following:

1. If making regular charitable contributions is part of your core value system, then continue that habit.
2. Establish an emergency fund equal to at least three months of your family expenses. This fund should be placed in a safe, easily accessed investment such as a savings account or money-market mutual fund. In case of a layoff, heath crisis, natural disaster, or other major problem, this fund will be indispensable. When you can, increase this investment to cover six months or more of expenses.
3. Develop an emergency supply of non-perishable food, water, and other essentials. The Hurricane Katrina disaster showed how long it can take to get government relief supplies into the hands of needy citizens.
4. Acquire health insurance appropriate to your needs. Depending on your situation, explore employer plans, student plans, and government options.
5. When your emergency fund is in place and emergency essentials are gathered, then invest 10%-20% of your monthly income in a 401K retirement plan or in a traditional or Roth Individual Retirement Account. Information about these plans is available on the Internet and at university financial counseling clinics. If you learn about them from sales people, beware of the sales person's sales motive. Always get a second or third opinion.

Get Financially Educated

Begin now to expand your knowledge of personal finance and investment options. A good source of information is personal finance classes at local community colleges or from university outreach extension services. The Internet can also be a good source, including the following websites:

• Money.com
• Kiplinger.com
• SmartMoney.com
• Quicken.com
• YahooFinance.com
• The book Till Debt Do Us Part by Bernard E. Poduska is another valuable resource.

As you seek out information, make sure you learn the basics of home buying, life insurance, mutual fund investing, and retirement investing. Learn to calculate the Time Value of Money (TVM) using one of the free TVM calculators available on the Internet.

Conclusion

Applying the principles of sound financial management is a critical life skill. Married couples who do this can work their way to money harmony and a stable financial future. Engaged couples who begin applying these principles now can have those same benefits and a smoother financial transition to marriage. Single individuals, too, will establish habits that will bring strength and peace to their lives.

Written by Todd Martin, Certified Financial Planner, and edited by Stephen F. Duncan, Professor, School of Family Life, Brigham Young University.

In The Family: A Proclamation to the World, married couples are charged with seeing after the temporal needs of their families.⁶ Couples starting out simply cannot afford to ignore money matters. Many years ago, Elder Marvin J. Ashton (1975, republished in 2007) asked, "How important are money management and finances in marriage and family affairs? Tremendously. The American Bar Association recently indicated that 89 percent of all divorces could be traced to quarrels and accusations over money. Others have estimated that 75 percent of all divorces result from clashes over finances. Some professional counselors indicated that four out of five families are strapped with serious money problems.⁴ Years later, Elder Joseph B. Wirthlin (2004) shared a similar concern: "The number of marriages that have been shattered over money issues is staggering. The amount of heartbreak is great. The stress that comes from worry over money has burdened families, caused sickness, depression, and even premature death".⁶

Regarding our temporal stewardship, the Lord said, "I, the Lord, ...make every man accountable, as a steward over earthly blessings" (D&C 104:13). "And it is my purpose to provide for my saints, for all things are mine" (D&C 104:15). Thus, husbands and wives are stewards over the temporal blessings of the family, including the financial ones. Nothing is truly owned. When couples view their temporal resources in this way, they are more likely to harmoniously seek what is right in using their financial resources.

A number of excellent articles and other information of the topic of personal finance management are available on the LDS Church Provident Living website. To access that, individuals may go to the main provident living site, http://www.providentliving.org and select the resource management link.

Another excellent resource is the pamphlet "One for the Money" by Elder Marvin J.Ashton. A class by the same title is available through church distribution centers or local ward bishoprics.

References

M.J. Ashton (2007, September). One for the money. Ensign,36-39.

J.B. Wirthlin (2004, May). E. Earthly debts, heavenly debts. Ensign, 40.