The Financial Challenges Of Getting Married

by Gregory J. Wellborn

Living vicariously through the lives of others is not normally a healthy thing to do. There are times, however, when it can be very helpful. This month, and in a follow up story later, we are going to look at a young engaged couple as they make the transition from approaching finances as individuals to dealing with finances as a couple.

The process sounds much easier than it really is. Most arguments between married couples are fought over money, so a thoughtful approach is needed. So, let's meet our young lovers.

Kevin Smith is a handsome, 20-something with a great job and promising future. His better half-to-be is Danette Jennings. Danette is about the same age, vivacious, pretty and also gainfully employed. They are very much in love, excited about their future and earnest in their desire to successfully blend their finances.

But earnestness is not always enough. Each of us comes with our own financial habits, some of our own creation and some we've learned from watching our parents. Such is the case with Kevin and Danette.

Kevin is disciplined and very organized by nature. He has established a pretty good budget and has excellent credit. Danette tends to be more conceptual by nature, has not developed a budget and would describe herself as a bit scattered at times. Nonetheless, her expenses do not exceed her income, so she in fact does live within a sort of budget, even if she is unaware of the day-to-day details.

Their views about money are also different. Kevin's disciplined approach has resulted in a strong confidence on financial matters. Money doesn't scare him, and he looks forward to beginning an investment program. While his parents handled money very well, most of his older siblings have not. Kevin says he's learned an awful lot by observing his sibling's mistakes. In short, his family's struggles strengthened him.

Danette's current situation masks some previous problems with money. When Danette's father died, the family learned that their life insurance company had excluded his specific illness in the fine print. Sadly, his passing not only caused much grief and heartache, but also generated an overwhelming financial burden for Danette's mother and for Danette who ran a business with her dad. Ultimately, she had to file for bankruptcy. As a result, Danette is very cautious, even fearful she would say, about money and implicitly doesn't trust financial institutions. Her family's struggles have handicapped her a bit.

Danette is looking forward to Kevin's guidance and help in finances. Interestingly, this may become a source of some trouble if Kevin exerts too much control by simply taking over and if Danette willingly abdicates responsibility. Rarely is long-term success achieved without both spouses being involved.

In terms of financial goals, both are on sound footing. Kevin and Danette share the same core values and immediate goals: house first, then kids, hopefully within 2-3 years. They know when they need to replace each of their cars and are committed to saving to make all of this work out. If there is any cloud on their horizon, it is Danette's mother's financial situation. She is still struggling financially. While she fervently doesn't want to be a burden to Danette, she may not be able to continue on alone. What that may look like is not very clear at this point.

In summary, while Kevin and Danette share common financial goals, they do come from different backgrounds, which have created almost opposite approaches to money. They will have to learn how to blend these together. Before getting married, they need to create a joint budget. They also should develop a basic financial plan to determine how much needs to be saved to amass a down payment for their first home and how to best reduce their existing credit card debt. In our next article, we will look at the steps Kevin and Danette actually take as they come together as Mr. and Mrs. Smith.