Frugal Newlyweds Financial Guide Part 4: Financial Checkups

If you are new to this series, welcome!  This series provides engaged and newlywed couples a financial guide to the road bumps that happen when you get married.  Here's a list of what you have missed.

Part 1: Gave information on learning about your own and your spouse's financial family tree.

Part 2: Use this spreadsheet or create your own to help you sort through each other's financial accounts.  Determine which accounts to save, which to close, look at changing and adding names and beneficiaries.  This is essentially the nuts and bolts of combining your finances.

Part 3:  Plan your future.  Look over your finances and determine your goals.  I gave a list of goals from most important to least important that you can use.

Today we finish with Part 4: Financial Check ups.  Just like it is important to regularly go see your dentist even if you brush your teeth every day, it is just as important to have regular financial check ups no matter how well you think you control your spending.  My husband and I do brief checks on our finances each week and a slightly more in depth look each month and then normally around New Years we reflect over the year and determine our new goals.  All in all it doesn't take that much time and by doing this we have been able to save about 50% of our income, while giving and living a great life.  Remember, I'm just a teacher and he works construction, so it can be done.

Weekly Financial Check Up Basics:

Open up your Mint.com account.  It should have all of your accounts linked to it.  If it doesn't make sure to add them.  If you don't like Mint then you should have some other program like Quicken or use a spreadsheet system.  I have found that Mint has worked great for me for over six years, so I would recommend it to anyone.

Scan through all of your purchases for the week.  Make sure they have been categorized correctly.  Look at the trends section to see how your overall spending is looking for the month.  If you spent a lot this week, you might want to tone it back some.  Determine what areas you might cut back on.

That is all you really need to do each week.  If you do this step, it will really simplify to the other check ups.  I have to admit that sometimes we have gotten really busy and didn't check the categories in mint for a while.  We ended up with a bunch of uncategorized transactions and we couldn't remember what we had bought (Wal-Mart can mean so many different categories for us).  Make sure to stay on top of this!

Monthly Financial Check Up Basics:

This needs to completed with your spouse.  As with any conversation that is important, make sure you have both eaten and are relatively well rested.  It is amazing how much better it goes if you do those two things.

Open up Mint.com and get our your goal sheet.  If you had debt, look at whether you are reaching your monthly goals toward paying it off.  Celebrate if you actually were able to pay off an account entirely.  I have vivid memories of when my parents paid off their mortgage.  It was a big thing in our house and made a huge impression on me of what a positive feeling you get when you pay something off.

Check out your emergency fund.  Did you need to use it this month?  If so, you might want to plan on putting future savings towards building it back up.

If you don't have any debt and your emergency fund is in good shape, then look at how you are progressing towards your goals (future home, car, retirement).  In Mint you can create goals and it shows you graphs of how you are doing.  We currently have our early retirement goal in mint and it is fun to see how we are doing on the thermometer graph.  As a math person, I can't get enough of graphs.

Finally, reflect on your purchases and your happiness.  Were there any purchases that you made that were unnecessary and didn't really bring you much happiness?  Companies spend billions of dollars to convince you that you are unhappy and that you will only be happy when you have their product.  Be smart.  Analyze. Are you really happier?  The more often you do this happiness inventory to easier it will be for you to make smart purchases.  Be careful before dissing a purchase that your significant other made before they analyze the happiness level it gave them.  Never forget that your marriage should be priceless, so before getting into a discussion over something they bought determine if it is really worth it.

Yearly Financial Check Up Basics:

To be honest your yearly financial check up should just be a rerun of Part 3: Financial Goals.  It is so important to make goals together, because either you are working together toward the same goal or else you are slowly splitting up.  Make sure you can come up with things to work together towards.  It will bring you so much closer and make your marriage much more fulfilling.

What do you do if you don't have the same goals?  First, you should really pray about it if you have any faith at all.  I am a very strong willed person so I will be convinced of one thing and my husband might quietly be pushing for something different.  However, when I slow down, calm my brain and really think about it, many times I am surprised that I actually agree with him.  If it is something that is extremely far away in the future, put of the debate for a while.  Things might happen and your argument wouldn't even be needed.  A good example of this is a couple to argued about where she would have a baby when they would have kids (he wanted hospital and she wanted home or a birth center), but it turned out they weren't able to have kids at all and ended up adopting.

Make sure to reflect on how last year's goals went.  Maybe you had a certain savings goal and you didn't reach it.  This is okay as long as you reflect on what happened that year to prevent it (maybe a health issue, etc.).  If you are a compulsive shopper, find out what your trigger is for that behavior.  Once you have identified the trigger (maybe driving by a certain store), avoid that trigger like the plague.  What happens is when you go by that trigger your body pretty much goes into zombie habit mode and wants to finish the script that you have been doing every time that you go by that trigger.  A good example of this would be a habit of buying coffee every morning (I drive McD's and it is always packed, so someone must have this habit).  You need to start making the coffee yourself and maybe plan a different way to drive that avoids going right by your typical coffee place.  

If you reached your goals you really need to celebrate.  My husband and I saved for four years before we bought a house.  At the beginning saving was really new and exciting as we kept track of it in mint and I created a graph in excel.  In the middle though it started to lose that sparkle and we really had to create incentives to make it fun.  I promise it will be worth it in the end.

Summary:  

If you follow all four parts of the newlywed financial guide you should really have a rock solid financial marriage.  However a word of caution: Make sure money is not the only focus in your marriage.  Money is just a tool.  You can just use it for yourself or I believe you can make the better choice which is sharing it.  Find charities that you believe and donate not only your money, but your time as well.  You will get much more out of giving than just hoarding.  Good luck and let me know if you have any other ideas or tools that you would want added to improve this series!

Frugal Newlyweds Financial Guide Part 2: Second Financial Date

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This is part two of my basic guide for newlyweds or engaged couples.  If you haven't already read part one, do that now.  Don't worry.  I can wait.

Now that you have talked about your financial ancestors, next you will need to talk about the specifics of your finances.  I think I heard some gasping.  Get over it.  Sooner or later your fiance or spouse is going to find out about your money situation and it might as well be now.  If you don't trust your partner with this information, maybe you should think a little harder about whether you should be getting married to them.

First, you will need to do the following things before your second financial date.  Make a list of every account that you have- checking, savings, brokerage, insurance, credit card, loans, retirement, and mortgage.    Bring the latest bill or statement from each of these and information on your insurance coverage.  Also make a list of all of the titles that you have- car, house, boat, trailer, motorcycle, etc. and bring that to the date as well.  ***New*** I have added a special spreadsheet that you can use to make this step easier.  Click here to download it.

For the actual date I suggest making the first part of this date as fun as possible.  Plan to stay at either your place or their place for the afternoon.  You will have a lot of financial documents out and about and you don't want to lose any.  The best time for most people would be a Saturday lunch because you are both really awake and relaxed and that leaves you with plenty of time to get everything done.

Have fun making lunch together.  It doesn't have to be something overly fancy or it can be if you are into that.  If you both don't enjoy cooking, then get some take out.  The key is to get in a place where both of you are relaxed.  Make sure both of you have eaten and are well rested.  I have worked with adults and preschoolers, and I can tell you that adults like to think they've evolved a lot past their three year old counterparts and don't have such bad reactions to lack of sleep or food, however they are fooling themselves.  Most arguments happen when at least one party is low on sleep or is hungry.  It is best to make sure both of those needs are satisfied before moving on.

After eating bring out your papers.  Take a big breath.  Tell yourselves you can do this.  Maybe bring out cookies to reward yourselves with as you finish each step.

Step 1:  Merge ahead!  Create a combined list of all accounts for both of you- banking, brokerage, insurance, credit card, loans, mortgages, etc.

Step 2:  Twinsies!  Do you both have a Discover card account for example?  When you are married do you just want to have one?  There are very differing opinions on combining finances when married.  I honestly can't imagine keeping separate accounts when you're married.  That would be way to confusing and much easier to hide things from each other.  However, I have heard there are happily married couples that keep their finances split.  I would challenge you to ask yourselves why you are keeping your accounts split though.  We have never regretted combining ours.

Circle all duplicate accounts and determine whether you will leave them separate or combine them.  When you combine you will actually be closing one account and adding a name on the other account.  Make sure to start to make a to do list for each person.  List the account, whether or not it needs to be closed, or whether they need to call and add the other person's name.

Next, determine if you want to close an account that isn't a complete duplicate, but is in the same category as something else.  For instance, you may have checking accounts that are at different banks.  Go through the same process as above.

Although merging accounts is a huge pain, I like to think of it as getting a series of shots.  The nurses try and do it as quickly as possible to get it over with.  If you go over all of this merging at once, you'll find that you can get this icky stuff over with and can move on to more fun things in your lives.

Step 3:  Falling in love.  Look at insurance policies.  First look at auto/home/boat/etc.  There is a lot of information on your policy that you should have brought with you.  If you have an insurance agent I suggest calling them and giving them information on both of your insurance situations (maybe you have a house and a car and your fiance has a renters policy and a truck) and have them give you a quote on combining all of your insurance needs.  You might find that it comes out much cheaper than the two policies alone.  If you don't have an agent look online.  There are lots of websites that will give you quotes online.

You will also need to look at health insurance policies.  You can get information on your policies normally from the HR department at your work.  You might want to compare and determine whose policy you want to use.  Almost always a "family" policy is much cheaper than two individual policies.  If you both are not insured I can not push enough that you need at least what I call "in case you chop your leg off" insurance.  My husband does not receive insurance through his work so when we were first married we had a very high deductible insurance that we paid for on our own because I was just student teaching.  We had saved enough that in case of emergency we could pay $10,000 and then the insurance would kick in.  The likelihood of needing the insurance was small, but now that healthcare costs are rising so much, it would have just taken one trip to the ER and we could have eaten through that deductible in a hurry.  We figured out how to do individual plans and now it is even easier.  Go to ehealthinsurance.com and request a quote to get started on your journey to responsible health insurance adulthoodland.

Once you have decided whose plans you are going to use, make sure to add the other person on to the policy.  Add this to your to do list.

Step 4:  Mrs. ?.  Obviously, if you choose not to change your name you can skip this step.  For the traditionalists read on.  This was a huge pain in the butt when I got married, so brace yourself.  I am cheering for you.  You can do it.  Make a list of all of the accounts you are going to keep that have your current name.  This is another good reason to nuke a few of your duplicate accounts.  After you get your name changed you are going to need to contact all of those accounts and fill out the necessary paperwork.  I will warn you that when I did this for my brokerage it was a huge pain.  Be prepared to have to get things notarized.  Not all of the accounts were that bad though.  You will want to start looking into getting checks with both of your names.

Small note- you might not want to add your name on accounts before you get your name changed unless you absolutely have to.  This will give you one less account to change the name on.

Step 5: Titles- aren't just for books.  Make a combined list of all of the assets that you own that have titles.  Consider adding the other person's name on that title.  If you choose to add a name, make sure to add it to you to do list.

Step 6: Until death do you part.  When you die (don't say if- it's going to happen) your money and assets have to go somewhere.  If you are like many people you never filled out the beneficiary information for your accounts.  Now is a good time to add your significant other to your beneficiary information.

Step 7:  Mints keep us fresh!  I cannot promote any website more than mint.com for any couple.  This is a free way to keep track of all of your accounts in one place.  You'll start noticing where you spend money, what accounts you are using and what accounts you might want to close.

Step 8:  Double the fun!  Double check each of your lists.  Your list should include accounts that you need to close, accounts that you need to add names to, accounts that you need to change names on, and accounts that you need to add beneficiaries to.

As you draw your financial date to a close I only have a bit more advice.  Remember that not only your assets, but also your debts are shared.  Be careful not to resent your partner for their debts.  Hopefully you consider their companionship as worth more than money.

Good luck on your second financial date!

Frugal Newlyweds Financial Guide Part 1: First Financial Date

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In honor of one of my husband and I's friends who is getting married this weekend I decided to write a small series of posts that can be a financial guide for newlyweds or soon to be newlyweds.  We've been married almost five years, so I think that qualifies me in two ways.  First, we've been married long enough to see some results of the decisions that we made early on and second, we haven't been married so long that the financial world is that different now than when we first married, so our advice would still hold.  I recently read a book that was written a little over ten years ago and it talked about 7% CD rates.  You'd be lucky to get much more than 1% now!

Today I am going to focus on what to do pre-newlywed status, i.e. when you're engaged.  During this time period it is really important that you really get to know your fiance well, not just emotionally, but financially also.  You don't want any huge surprises after you're married, although there will always be some surprises.

Now, if you are like most couples either one or both of you just groaned and said, that is so unromantic.  I'm here to tell you now that sometimes you've got to do some unromantic things in order to save your marriage ahead of time.  Many marriages are brought down by money issues, so you want to get them out in the open before you've sealed the deal.

First, plan two financial date nights.  The first one can happen anywhere.  The second one, I suggest cooking at home or picking up take out and going back to one of your homes so that you don't risk the chance of losing important financial documents in a public place.  You never know what a weirdo might do with your old credit card bill.  I will give you details on that second date in my next post.

For the first date night your main goal is to talk about your parents/guardians and how they earned, used, viewed money.  You don't need to talk about your own personal money situations yet.  Knowing the way money was handled when your fiance was growing up will really help you understand some of the things he or she does.  It definitely opened my eyes to some of the things that I saw my husband doing.

Before you start asking questions make sure that you both realize that these questions are there to guide discussion.  Be careful not to make judgmental comments about your future in-laws.  Each of your jobs is to answer as best as possible and then to listen.  Don't give a commentary about the other person's upbringing.  You are just fact-finding.

Here are a list of possible questions:

• What jobs did your parents have growing up?  Did they switch jobs frequently?  If they did, why
• What type of home did you grow up in(apartment, duplex, small/medium/large house)?  Did you move a lot?  Why?
• Did your parents have debt while you were growing up?  If so what type, car, home, credit card?  Why?
• Did your family go on vacation much?  Where did they go?  What did they do?
• Do you consider your parents savers or spenders?
• Are your parents investors?  Explain.
• What was your parents view on money?
• What was your parents view on giving?

If you aren't used to talking about money, this is going to be incredibly painful.  However, just like exercise it is really necessary.  If you haven't talked about money you are like those 400 lb people on the Biggest Loser.  It's going to take some time and effort, but you can get that financially flabby body in shape!

This conversation is something you might just laugh off.  However, consider it just as important as giving your family history at a doctor's office.  Why does your doctor care what diseases your grandparents and parents have had?  Clearly, those diseases can continue to haunt families for generations.  Yet, just because your grandfather had a heart attack does not mean that you are destined to as well.  Just like you shouldn't be too proud to admit diseases in your family, don't try and cover up bad financial decisions of your parents.  That's all they are... your parents' decisions.  It will be up to both of you to determine how you let those decisions affect your future together.

Good luck and remember to just keep it on topic- no commentaries no matter how strange your future in-laws sound!