Archive for Budgeting

Newlyweds: Don’t Let Financial Stress Take the Cake

How Newlyweds Should Talk about Money

There are so many things to think about when you’re just married, or about to be, and no one would rate finances as the most exciting of them. In fact, studies show that money (not relatives) is the number one reason couples argue. Those financial arguments (again, not relatives) are one of the top predictors of divorce.
So, how can you avoid becoming a statistic? Here are some tips.

Talk to Each OtherCouple laughing over a cup of coffee

A poll by the National Foundation for Credit Counseling found that 68% of engaged couples held a negative attitude about discussing money. 45% considered it “necessary but awkward,” while 7% said it was “likely to lead to a fight.” Five percent said they thought it would cause them to call off the wedding.
The result? Couples just don’t talk about finances. A Fidelity survey said more than one-third don’t even know their partner’s salary. The irony is that 72% of those same couples said they communicate “very well” about financial matters.
It’s not surprising, when you think about it. What’s romantic or sexy about debt, budgets, taxes, wills, and the like? But, while there isn’t a plan to keep every newly married couple happy, experts agree: Don’t wait to talk about money.
Taxes, for example, are boring (and scary), but they may be important right now. If you and your spouse are employed, the “marriage penalty” may force you to pay more taxes when married than while you were single. So, think about marrying in January rather than December. But if one spouse earns most of the money, you’ll enjoy a “marriage bonus” and pay less than two singles; a December wedding might be wise in that scenario.
Speaking about money now is definitely important, but so is how. A 2004 study by SmartMoney found that more than 70% of couples talk about money at least weekly. So what’s the problem? “Most of us don’t know how to talk about money,” says Mary Claire Allvine, a certified financial planner. “People tend to be emotional and reactive, not strategic.”
Whether you talk about money weekly, monthly or on some other schedule, what matters is that you agree on a system and stay open to changing it.

Get Started

Taking the first step can be difficult, so start off easy, with questions like “What’s your first money memory?” or “How did you spend your allowance?” Then move on to some of these:

  • “Are you a spender or a saver?” – If one of you is a saver and the other a spender, create a budget that considers both styles. Studies show that men and women spend differently. Women often take care of daily expenses (groceries, utilities, clothes) while men make larger purchases, such as TVs, cars or computers. The amounts might be the same, but the perceptions are very different. About 36% of partners don’t talk to each other about big purchases, and that’s a recipe for disaster.
  • “Are you in debt?” – ATD Ameritrade survey found that 38% of couples were “only somewhat” or “not at all” aware   of their partner’s debts. When you get married, your spouse’s debt doesn’t automatically becomes yours, but what he or she owes will affect both your choices. For instance, heavy credit card debt could make it more difficult to buy a home. Make reducing debt a priority.
  • “What are your financial goals?” or “Where do you want to be five or twenty years from now?” – People who identify specific goals make faster progress toward savings and investing targets. But first, you need to agree on what those targets are: buying a home, starting a family, being debt-free? List your individual goals, then share them with each other and make a joint plan.
Know what’s important to each of you. What do you value more, things you can keep or experiences to remember?       Maybe one of you wants to buy a house while the other thinks saving for retirement is essential. Get these things out in the open early.

Trust Each Other

A recent Money survey revealed that couples who trust their partner with finances feel more secure and argue less. That level of trust, though, isn’t common among newlyweds. “We’re intimate with our partners in so many ways before marriage, and yet money remains off the table,” says Paula Levy, a marriage and family therapist.

Be honest. If you made a purchase you shouldn’t have, own up to it. Some 40% of men and women confess they’ve lied to their spouse about the price of something they bought, and lying about money can have huge repercussions.
Support each other. Retreating doesn’t help, and neither does finger-pointing. Work together to come up with a game plan.

You’re Still Individuals

Celebrate the differences. If your partner is a bargain-hunter, put him in charge of the spending while you invest the savings. And decide on a monthly amount each of you can spend, no questions asked. The average amount couples say this should be, according to Money, is $150.
There are pros and cons to opening a joint bank account. SmartMoney found that 64% of couples put all of their money in joint accounts, while 14% kept everything in separate accounts. For many newlyweds, the ideal choice may be both: yours, mine, and our accounts. Once you’ve determined shared living expenses, both of you can contribute your portion of those costs to the joint account based on your share of household income.

Ask for Help

If you and your spouse find money conversations tough, you might want to bring in a financial planner or other professional. Your credit union can help – that’s why they’re there. Take steps now to ensure that money won’t put rocks on your path to wedded bliss.

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Why is Halloween Important to Children?

Importance of Halloween for Children!

Halloween Candy

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Can you feel it in the air? It’s almost Halloween! It’s time for costumes, ghosts, spooky movies, candy corn, and most importantly for the kids out there, it’s time for trick or treating. Sometimes, it’s easy for adults to forget just how important that one night is for our kids, at least until they get their costumes on and lose their minds with excitement. Once they’re running and giggling and hoarding their chocolate, it’s pretty clear what a big deal it is for children.

Your kids probably can’t tell you why it matters so much. If you try to ask why they’re excited, the question seems so silly to them they’ll probably just reply “candy,” unless they’re a little older, in which case they’ll still only say “candy,” but do so in a tone of voice that indicates a plethora of contempt at your questioning.

Here’s why it matters: Your kids are, in many important ways, the poorest people you know. They don’t really own anything. They have clothes and toys, but they have little control over what they own. Even if they receive an allowance, kids at trick-or-treating age don’t have the mental capacity or personal experiences to really understand saving or thinking about tomorrow.

They’re poor in other ways, too. If you have a really bad day and you can’t even look at the kitchen, you might decide to head to a local Italian restaurant for a passable spaghetti dinner. If they have a long day, they get to eat what is put in front of them. For most kids, the most control they have over dinner is deciding how much ketchup to put on their plate. No wonder they use so much of it.

If you get a chance, go watch kids under seven while they’re at school. One of the most common games entails the tearing up a piece of paper and writing “birthday” on each slip. Then the kids hand out tickets to their birthday party. Note: it does not matter how long it is until their actual birthday. Children are too poor for calendars. Why do they care so much about their birthday party? Because once a year, they get to take control. They get to decide who to invite. When you don’t own anything, that one day takes on special importance.

Halloween is important for the same reason. Once a year, kids get an enormous payday. They get candy, which is the universal currency of childhood (retaining value at a level the European and Chinese central banks must envy), and they get so much that it can consume their whole lives. Some kids are good at rationing, and they make it last until Thanksgiving. Other kids have been waiting for the late-October Bacchanal all year, and they’re going to finish the whole pile before bed; oral hygiene can take a hike for the evening.

This might be the perfect time to talk to your kids about budgeting, and making the pile last. It might be the time to show them how grownup paychecks work, and “tax” their pile. It might be the time to explain the relationship between labor and income, demonstrating that the more houses they visit, the more candy they earn. They also observe that some givers are more generous than others.

Or perhaps this might not be a time for kids to learn about money. They’re distracted, and every word you say is preventing them from getting to their candy. This might be a time to stop yourself from teaching them about money, so you can learn about your kids. What does candy mean to them? Why does owning things matter so much? If you ask them to share their candy, are they thinking you are taking away their candy? Do they make trades to get their favorites, and if so, are they good negotiators? If you’re really interested in helping the kids develop good money habits, Halloween is a way to clearly demonstrate ideas, but it’s also a time to see how much they know on their own.

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