Your Guide to Managing the Real Dollars—and the Real Emotions—of Your Relationship
Too often with money, couples face two choices: fight and risk making the situation worse, or keep quiet and risk making the situation worse. Financially Ever After offers a third option: family financial fluency—the insight, knowledge, and vocabulary every couple needs to communicate effectively about money.
Jeff D. Opdyke, previously The Wall Street Journal's syndicated "Love & Money" columnist, covers any and all financial issues that couples face, including budgeting, deciding on whether to have joint or individual accounts, dividing up family financial chores, confronting debt, making major purchases, as well as handling mortgages, employment, children, and even engagement rings. He offers dozens of real-life scenarios between couples, with scripts and suggestions for how to broach delicate money-related subjects with your significant other, whether he or she has a shaky credit history or is feeling left out of family financial decision-making.
The book also provides helpful tools to organize your financial life, such as a budgeting chart, a "scorecard" to track spending, and an "affordability calculator" to help you figure out how much buying a house will cost you.
A must-read for any couple starting out, Financially Ever After lays the groundwork for building a healthy and thriving financial life together.
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About the Author
Jeff D. Opdyke has written about personal finance, family finance, and the investment markets for Tgiehe Wall Street Journal since 1993. He lives in Baton Rouge, Louisiana, with his wife, Amy, and their two children.
Read an Excerpt
Financially Ever After
The Couples' Guide to Managing Money
Ten Questions Every Couple Must Ask
Question 1: Do You Have a Basic Understanding of Money?
This seems like a no-brainer. Just about everyone has been handling cash in some fashion since grade school—of course you have a basic understanding of money. Only, many people don't.
If they did, then why does research out of Indiana State University find that young adults—those between 20 and 24—represent the fastest-growing source of bankruptcy filings in the country? Meanwhile, the Gen-X crowd—those born generally between 1965 and 1978—is more likely to file for bankruptcy than were their Baby Boomer parents at the same age. Those bankruptcies are sparked in large part by soaring credit card debt and the fact that too many homeowners opt for magical mortgages that open the door to a house well beyond their ability to pay. This led to a rash of foreclosures that has pushed people out of their homes, often robbing them of whatever equity they had in their house.
None of that indicates a basic understanding of money. It does, however, indicate a basic understanding of spending—and that's the problem. Fact is, Americans in general—not just Gen-Xers—are a financially illiterate lot for the most part. Studies of everyone from high school seniors up through older adults routinely bear this out. As a society, we spend more than we save so that our savings rate as a nation is among the lowest in the world.
You can see why it is important for spouses to know if their partners possess basic moneyknowledge. The wiser you each are financially, the smarter the decisions you'll make together, ultimately leading to a more fulfilling relationship, since you'll both feel more secure financially and will more likely achieve whatever it is you want your money to achieve.
But here's the rub: Financial prowess does not reside in everyone, nor does it appeal to everyone. Lots of folks aren't naturally inclined to care about the minutiae of money: managing investments, comparing insurance policies, or shopping for the best interest rates on savings accounts and mortgages. That's enough to cause a conflict right there. The one who does care will ultimately be frustrated that their partner could care less; and the one who could care less will ultimately be frustrated by the seemingly constant—incessant—focus on money. It can be a never-ending spiral that intensifies as you slip deeper into the vortex. The money-conscious partner tries ever harder to instill financial values into a partner; the partner tries ever harder to rebuff those efforts—all of which leads to an even harder push on both sides. At some point, your conflict erupts into discord that flows through other parts of the relationship, and even into the bedroom.
I'm not saying that to succeed in marriage you must absolutely master the intricacies of personal finance and be able to wax philosophically on the debate between growth and value stocks or the merits of fixed-rate versus adjustable-rate mortgages. If you know all that stuff, great. If you care to know all that stuff and you don't, pick up any one of the numerous comprehensive personal-finance guidebooks (I'm partial to The Wall Street Journal Complete Personal Finance Guidebook and companion workbook . . . but, then again, I wrote those).
The real problem you must address—the problem Question 1 is getting at—is what to do when neither of you, or only one of you, really understands money. That must be rectified, otherwise you're likely to spend your relationship continually insecure financially, or frustrated with each other, or maybe even routinely fighting.
You probably already know if you have a good understanding of money. If you regularly balance your checkbook when the statement arrives, if you live below your means so that you can afford to contribute to your 401(k) plan every paycheck or an IRA every year, if you refuse to carry a balance on your credit card, and if you're leery of—not excited by—an interest-only mortgage that allows you to buy the $300,000 house you otherwise can't afford with a traditional mortgage, then you probably have as solid a financial foundation as you need to grow your wealth. If none of that rings true to you—or if you sense that none of this defines your partner—there's a gap in the financial knowledge base you need to confront.
You don't necessarily have to ask if your partner understands money—your partner may not even know how to answer that question. But you will hear the answer in comments about late fees imposed on a credit card again, grousing about never having the money to afford the car-insurance premium when it routinely rolls around, gripes about an inability to make ends meet. Ask simple questions like "Do you have money saved in your 401(k) plan?" and listen for the "why" behind the yes or no answer. Ask whether your partner follows a budget, then ask why. What kind of car does the love of your life drive? Or what about the house, the furnishings, the style clothes hanging in the closet? Does the house itself, or the neighborhood it's located in, seem consistent with what you generally gauge to be this person's level of income? Do the furnishings and the clothes square up as well? All of these offer snippets of information you can use to answer Question 1.
Recognize, though, that some of the financial gap you see might have emotional roots. I talk to lots of couples in my job as a personal-finance writer and columnist, and after all these years I'm still astounded at the degree to which people will open up to me—a stranger they've never met—about their financial lives. Though the details are different, many of the stories are the same: "My (husband/wife/partner, fill in the blank) and I have very different styles and we fight about money because (he/she) doesn't understand me."Financially Ever After
The Couples' Guide to Managing Money. Copyright (c) by Jeff Opdyke . Reprinted by permission of HarperCollins Publishers, Inc. All rights reserved. Available now wherever books are sold.
Table of Contents
Section 1 The Finances of Love: Money Matters Before Marriage 1
Chapter 1 Ten Questions every Couple Must Ask 15
Question 1 Do You Have a Basic Understanding of Money? 15
Question 2 What Is Your Money History? 20
Question 3 What Are Your Financial Aspirations? 25
Question 4 What Are Your Career Expectations? 27
Question 5 What Are Your Financial Assets and Liabilities? 31
Question 6 How Do You Use Debt? 35
Question 7 Will We Operate from One Checkbook . . . or Three? 45
Question 8 How Should We Divide Financial Duties? 57
Question 9 Do We Need a Prenuptial Agreement? 61
Question 10 Who Buys the Rock? 67
Section 2 A Family Affair: Money Matters After Marriage 73
Chapter 2 Money And Emotions 79
Chapter 3 Household Budgets: Our Daily Dollars 97
Chapter 4 Household Debts: In Love...And In Hock 145
Chapter 5 Household Savings: Investing for Tomorrow 181