Love and Money. What are the the top five mistakes couples make in marriage with their finances as a couple?
#1 Cashing out of retirement plans early.
Please, whatever you do, don't do that. Companies are not offering pensions like they used to and once you have it in your 401(k), if you take it out, you can't put it back in.
#2 Enabling each other.
It's easy to say, 'Yeah, let's go out and do this. Let's buy that TV." It's not about having what you want, it's about wanting what you already have. See, it leads to the third biggest mistake that couples make with their finances:
#3 Allowing debt to take on a life of its own.
It's really tough to make ends meet as it is, but when you add 21% or 26% interest compounding on a credit card, it becomes much more difficult and credit cards then grow to the point where you can't make ends meet.
#4 Not planning for emergencies.
When you go into a marriage, when you're together as a couple, you've just got to assume that emergencies are going to occur-- something's going to go wrong with the car, someone's going to get sick. Assume, especially with what's happening in the economy. It's not unusual for one or even both spouses to be losing their jobs, so you've got to assume that's going to happen and set aside funds accordingly.
#5: Keeping Secrets.
That's the worst thing you can do. You've got to enter this marriage, enter this relationship, with both of you participating in the financial decisions. What happens if death or divorce were to occur? You want to be able to take over those financial decisions seamlessly without panicking, without fretting and, more importantly, without making the mistakes yourself.
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