From student loans to credit crunches, financial woes can shake even the strongest of relationships. We asked a professional money manager to sort through some of readers' major money concerns. By Lauren Le Vine, REDBOOK.
"Food and gas are such a money drain!"
For recurring expenses, you and your spouse should work together to make the money you spend work harder. "To save on gas, look for online tools that can help you find the best prices in your area. The GasBuddy app, for example, shows you prices from all the stations in your area, as well as the distance to each," says Linda Descano, the president and CEO of Women & Co., a service of Citi that provides multi-faceted information about all things money-related. You should also look for credit cards that offer rewards points (which you can use for gas cards) and cash back on items like gas and groceries. To save money on food, make a weekly menu, not just a shopping list. Shopping for only what's on your menu will save both time and money, plus it cuts down on waste. Says Descano, "The more you stick to your menu plan, and incorporate using leftovers into your dinner routine, the more you'll save."
"We both made terrible decisions in the past."
The most important thing you can do is be honest, knowledgeable, and up front about your past financial troubles. As the old saying goes, "admitting you have a problem is the first step," and this is totally true when it comes to money troubles. You need to acknowledge things like debt, bad investments, overdrawn accounts, and bad credit scores. Once you've identified the holes, it's time to patch them up. "Take stock of where you are financially: What's coming in versus going out, and what do you have saved?" Then, put together an action plan based on what expenditures are important to you and where you want to be tomorrow financially. You can seek the advice of a professional money manager, but often just the mere act of mapping everything out helps you breathe easier and feel more in control.
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"How can we stop living paycheck to paycheck?"
First, you need to take a snapshot of your finances: How much is coming in versus going out? Track your expenses for a month to see where exactly your money is going. You may need to recalibrate what's a "must-have" versus just a "nice-to-have." You may have to make a few sacrifices in order to start saving and create an emergency fund, Descano says. Then, divide up your savings needs into two main areas: long-term, which is for retirement, and short-term, for things like home repairs or medical emergencies. Start automatically putting aside part of every paycheck - no amount is too small - into a savings account. Aim to accumulate enough cash to cover three to six months of living expenses at minimum, and set that aside in case of emergency. From there, you can start setting aside money for long-term savings needs.
"As a stay-at-home mom, how can I avoid feeling like our finances are beyond my control?"
Even if your spouse is the breadwinner, you need to approach the family finances as partners who make decisions together. "The money being earned in a marriage belongs to the team, not the person who makes it," Descano says. You need to own your financial health; it's not something that should be abdicated to a partner or advisor. Maintain a good grasp on your credit score (as well as credit in your own name) and net worth, and take advantage of a spousal IRA. Manage the family's financial planning by tracking expenses, making sure bills are paid on time, and looking for unnecessary spending. The more you know, the better off you and your family will be.
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"Can we still start saving if we're middle aged?"
"The harsh reality is, the later you start saving, the fewer options you have," Descano says. You should dial down your spending now to accelerate your savings, but those lost years may mean having to work longer than planned or retiring with a smaller nest egg. Next, you should visualize what you're saving for. If it's retirement, pin down the specifics: Will you relocate? Travel? Take all these factors into consideration and analyze your current financial situation, identifying all the pieces. Once you have a better picture of what you have and what you'll need to retire in your chosen manner, you'll be able assess what changes you can make now to help meet them.
"We can't talk about money, and it causes a rift."
Money is already a loaded topic, and on top of that, partners will almost always enter into a relationship with financial baggage. When you talk about finances with each other, make it about numbers and facts, not emotions and blame. Discuss all aspects of money: your past, fears, concerns, and dreams. Then, you need to work together to set clear spending and savings goals. And don't just talk, put your budget and plans in writing to stick to them more effectively. Descano also recommends appointing someone "household CFO," usually the person who is good at managing money, staying on top of things, and actually enjoys the process. Keep in mind, however, that being CFO doesn't mean you control all financial decisions. It means looking out for red flags and helping both of you stay on track to reach your savings goals.
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"Does your financial past become both of your problems?"
According to Descano, if your spouse brought significant debt to the relationship, you're not legally responsible for that debt after you get married. That said, if, for example, he gets sued over debts after you tie the knot, it could result in the freezing of joint bank accounts and put communal money (even if it's mostly yours) at risk. "Depending on the amount of debt, you may want to keep certain accounts and assets separate," Linda Descano advises. It's also a good idea to check with an attorney about your state's liability policies.
"How can we enjoy anything when we're living paycheck to paycheck?"
Just because you're sticking to a budget, paying down debt, or starting a savings plan doesn't mean you can't plan and splurge a little every now and again. "That said, there is some truth to the adage 'The best things in life are free,'" Descano points out. When you think of your favorite childhood moments, chances are you remember the experiences more than the material things. If you can't afford an anniversary gift or dinner at an expensive restaurant, have a picnic at a free outdoor concert. Leave the kids at your parents' house so you two can have a night alone and sleep in the next day. You'll definitely remember that lazy Sunday brunch in bed more than an expensive present.
"Can being married actually help with money issues?"
Make sure you've updated your marital status so you can both take advantage of benefits available to joint ownership of financial assets. Healthcare benefits and tax returns are two good places to look. For insurance, figure out who has the best coverage for the cost involved and use that health plan. Married taxpayers usually file joint returns because of benefits including eligibility for certain credits and deductions.
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