It is a well-known fact that financial difficulties and disagreements are the number one reason for divorce. Even with this knowledge, newlyweds continue to enter into marriage with out a financial plan and in affect make some very common financial mistakes.
The number one biggest mistake made by most couples is not budgeting. With out a budget, it’s easy to waste money because you don’t know where your money is going. In a partnership, it’s important that every dollar going in and out is accounted for and both people in the partnership agree upon and understand how the money is being spent. In order to be smart financially, you need to start with a budget. The king of financial peace, Dave Ramsey, has some very helpful budgeting forms on his website that can get you started.
The budget is the most important factor in obtaining financial peace and eliminating arguments over finances with your partner, however, there are other mistakes that can be avoided, the most common, in no particular order are: control of a shared income (even if only one spouse works, every cent belongs to both individuals), financial secrets, and not saving.
It’s important that both partners are involved in financial decisions and as mentioned earlier that both partners understand what money is coming in and where it is going. If only one partner handles the finances, that partner inevitably will have more control over the money, which can lead to resentment and arguments. Even if only one person writes the checks, the other person needs to know how much the checks are written for and whom they are made out to. No financial decision should ever be made with out the consideration of both partners.
Although it may be hard for some to believe, it’s actually more common than you would think for a partner or spouse to keep financial secrets from their significant other. This includes anything from debt to bad credit. Full disclosure of financial history is strongly advised for any couple planning on entering into any partnership. You don’t want to save for and find a beautiful home only to find out at the time of applying for a mortgage loan that your spouse’s credit is too bad and you won’t qualify to receive funding to buy that house. No matter how much you trust each other; you must know everything about each other’s financial situations before beginning a life together.
Not saving is a big mistake. You never know what could come up. Someone loses their job, a car breaks down, your air conditioner goes out, whatever the situation, you need to have at least three months of finances saved just in case, this is known as an emergency fund and is absolutely necessary. In your budget, you should have money budgeted to go into your emergency fund every month.
Going into a marriage with full financial disclosure and a financial plan agreed upon by both partners is important. Set your marriage up for success by addressing the issue that is most likely to end your marriage in divorce.