Financial Advice for Engaged Couples

                                                                        

Weddings in America are a transition state of living with your parents to moving in with your spouse to start a new life.  A wedding is an official form of recognizing a union between a man and a woman. The final transition symbol is when the bride is taken from the arm of her father or parents and given into the arms of her husband. 

The average cost of a wedding in the United States is over $20,000.  Going into debt as soon as you get married is a bad way to start off a marriage.  Many couples go into debt paying for a wedding and when they could have used the money as a down payment on a home, pay down debt or plan for retirement.

Marriage is a wonderful union between couples who love each other and want to spend their lives together. However marriage takes good communication skills, hard work and compromise.  Marriage has many benefits such as:  getting reduced rates on insurance, avoid paying estate tax, gifts between spouses are not subject to gift tax, and assets are owned jointly and other tax benefits.  

The New York Times reported that two out of three second marriages fail.  One of the major factors in couples getting divorced is due to finances.  Here is some helpful guidance on what engaged couples should discuss prior to getting married and keys to relationship success. 

What You Should Discuss

1. Views. Discuss your views on wedding ceremony, career goals, educational goals, pets, marriage, family, health habits, children and other important topics.
2. Bills. Determine how expenses and bills will be handled. Be honest about your financial situation. Examine each other’s spending habits and work towards a compromise.
3. Accounts. Determine if you will have a joint account or separate accounts. You can have one joint account to pay all joint bills and then have separate accounts to spend left over money however you like with the understanding that both of you are aware of the other's separate accounts.
4. Obligations. Discuss any obligations to family or others such as financial, chores, etc.
5. Assets. Determine if you want to use a prenup to separate assets you acquired prior to meeting your mate.
6. Future. Discuss future goals such as: insurance needs, children, retirement and estate planning.
7. Experiences. Discuss past life experiences that have affected you negatively to help your partner gain perspective on your thoughts and behavior patterns.

Keys to Relationship Success

1. Arguments. Don’t go to bed angry. Resolve differences prior to going to sleep.
2. Communication. Avoid making assumptions. Keep open and honest communication throughout your relationship.
3. Compromise. Be willing to compromise. Marriage is not one-sided.
4. Emergencies. Create an emergency fund to cover bills for 9-12 months to pay for unexpected expenses or if you experience a financial crisis.
5. Buy insurance. Buy adequate health, life and disability insurance. Many Americans go into debt due to medical bills and lack of insurance. 
6. Verify. Verify bills were paid. Setup protections such as: overdraft protection, renter’s insurance, and homeowner’s warranty. Keep insurance policies and warranties up-to-date. 
7. Laws. Know laws in your state regarding married couples, common law marriage and taxes.

Financial Lessons from Dick and Jane

                                                                 

Millions of people enjoy watching movies. Over 20 million consumers pay the largest cable providers to watch cable.  I don’t watch television shows but love watching movies. I love watching the movie “Fun with Dick and Jane” starring Jim Carrey and Tea Leoni.  This movie shows the determination, sacrifice, humility, courage and perseverance a married couples displays to turn their life around after a citywide economic disaster. Movies impact most of our lives. You can learn some great life lessons from watching movies.  Here are 14 financial lessons you can learn from watching the movie “Fun with Dick and Jane”.

1. Rise to the challenge.  Don’t get depressed or continually focus on the problem. Focus on solutions. You are smart, use your brain and challenge yourself to find ways to get over your hurdle.
2. Don’t complain. Don’t constantly complain about your situation. Complaining doesn’t change your situation, taking action does.
3. Don’t put all your eggs in one basket. In the movie, Dick and Jane put all their money in the company stock which is always a bad choice because you can’t control and don’t know if a company will be a success or failure. Always have a backup plan. Try to have a plan A, B, C and D to prepare for unexpected events such as a job layoff or illness.  Develop what-if scenarios and develop possible solutions for each scenario.
4. Tap your relationships. Due to their good relationship with their nanny, Dick was able to get a job lead.
5. Pay attention. Pay attention to your surroundings. Dick lost his wallet which caused all kinds of problems. Keep items such as your wallet in a safe place and know where it is at all times.
6. Prepare for the unexpected. Life happens. Nothing last forever.  The ones who survive are those who plan for the worst and those who don’t give up. Develop a plan to deal with unexpected events.
7. Scale back your lifestyle.  Let go of your ego and pride. Face reality and scale back your lifestyle. Forget what anyone thinks. You should only be concerned about what you think. Do the best you can until you can do better. If you believe you can do something then do it. Don’t doubt yourself.
8. Use teamwork. Seek help from family, friends, your church, social service organizations, non-profit agencies, etc. that offer help to those who are in need of assistance.
9. Get advice from your social network. Reach out to your social network to get advice about whatever issue you need help with such as: employment, financial resources, financial aid, etc.
10. Be flexible. Don’t focus on getting the same type of job you had.  Expand your search.  Dick waited in line all day for a job. Continue your search. Never give up. If you give up on yourself everyone else will give up on you too.
11. Look for non-traditional jobs. There are several non-traditional jobs such as food service delivery, cooks, drivers, street vendors, babysitters, cashiers, bartenders, etc. that can provide income until you are able to get the job you desire.
12. Learn from others. Their neighbors were not financially ruined because they didn’t put all their eggs in one basket and had financial reserves.  They were able to maintain their lifestyle even though the job market tanked.
13. Stay calm. Dick got excited and emotional during various times in the movie which prevented him from making rational decisions. Don’t make decisions when you are emotional. Wait until you calm down to make decisions.
14. Be supportive. Even though Dick’s ideas sounded outrageous, his wife Jane supported him in all of his crazy efforts to generate income and Dick supported Jane in her efforts to get a job.

Financial Advice for the 99 Percent

                                                                    

If doesn’t matter if you make $20,000 or $2,000,000 a year, everyone needs help with managing their money and meeting their financial goals.  You can use self-help resources such as books, television shows, seminars or courses but you may reach a point where you need additional help, that’s when a financial advisor comes in handy. If you do not have a financial advisor you should consider hiring one as your income increases, lifestyle changes occur such as marriage and children and assets increase such as purchasing a home, investment property or starting a business.

Financial advisors help clients reach their financial goals including retirement, paying for college education or starting a business.  Some financial advisors can also assist with creating a budget or spending plan, paying down debt, choosing investments, managing their finances, taxes, savings and wealth management. Financial advisors are not just for the wealthy. Financial advisors help clients at all income levels.  Shop around to find the right one for you.

There are two types of financial advisors:  fee-only and commission-based.  Fee-only advisors charge a fee for their services usually $150-$300 an hour or per session or may charge a fee based on the annual percentage of assets that are managed. Fees should be disclosed up-front. Fee-only advisors offer unbiased advice because they are not motivated or required to sell products and services to get paid.

Commission-based advisors receive a commission by fund companies or brokerages for the sale of financial products and services and receive a percentage of the total amount clients invest in specific products.  Commission-based advisers receive a percentage of the total number of transactions a client makes and may charge 0.5% - 2% of the assets they manage for each client. Commission based advisors are more concerned with their own career needs than their clients’ needs because they are motivated or required to sell products and services to get paid.

A financial advisor can:  help you generate more money for you and your family, help you to be better prepared for changes in your life, provide protection against mistakes and unexpected circumstances, provide stability and peace of mind by ensuring your financial goals are met, save time, provide guidance on retirement and investment options, decrease your tax liability, determine insurance needs, and analyze risks. Here are 23 reasons to hire a financial advisor:

1. You heard about a financial product or service that you think may be a good choice for you.
2. You want a second opinion on a financial matter.
3. You don’t have any debt or financial issues and don’t feel you need any help or that you know everything you need to know about finances.
4. You want to or are currently saving for retirement.
5. You want to retire early, start a business or do volunteer work in another country.
6. You want to setup investment accounts to fund college education.
7. You have personal financial obligations to family members or others.
8. You want to learn how to track spending.
9. You need help to create and meet financial goals.
10. You want to address credit issues.
11. You want to develop good spending habits.
12. You want to organize your finances.
13. To help you save money on fees, interest, etc.
14. To help you earn more money for savings and retirement accounts.
15. You want to analyze your insurance needs.
16. You want to achieve financial goals.
17. You have a lump sum of money to invest.
18. You want to create generational wealth.
19. If you are getting married or getting a divorce.
20. You experienced a financial crisis.
21. You want to buy or sell a home or investment property.
22. Death of a spouse.
23. You want to donate a large sum to charity.

Financial Tips for the Rest of the Year

Only 4 more months left until another year.  Did you follow any of your New Year’s Resolutions? It’s not too late. Hopefully one of your resolutions was to improve your finances.  Finances are a big part of your life.  Finances can destroy relationships; result in divorce, arguments, sadness, depression, anxiety, fear and health issues. Finances have to be properly managed.  Exterminate bad spending habits. 

One key to improving your finances is to set financial goals that you know you will be able to achieve.  Make a promise to yourself that you will do at least one thing to become better at managing your finances.   Make sure your goals are positive statements. A goal should be similar to an affirmation, i.e. I will pay off my Visa bill by March 2013 instead of an uncertain or negative goal such as, I hope I can pay off my Visa bill by March 2013 or I will try to pay off my Visa bill by March 2013. Here are 13 easy ways to help you improve your finances through the rest of the year. 

1. Change Your Mindset.  Change the way you think about money. If you believe you will always be in debt or always be broke you will.   
2. Develop a Financial Plan (Budget). Write a list of your entire total monthly expenses including debt and write down your total monthly income after taxes.  If you do not have any money left over (at least 10% of your monthly income) look at the areas where you can reduce spending.
3. Spend less.  Reduce spending by 30-50% each month. You should always have extra money left over each month after you pay your monthly expenses; if you don't you need to change your spending habits.
4. Save. Do at least one thing a week to save money, i.e. bring your lunch to work or bring coffee from home one day a week.   Create an emergency fund with enough money to cover at least 9-12 months’ worth of monthly expenses.
5. Get Out of Debt. Get current on any late payments. Negotiate with creditors to setup payment plans and pay off all debts. This will increase your credit score.
6. Limit Credit Card Usage. Use your credit card for emergencies only.  Keep credit card balances at 20% or less of the credit limit. Pay balances off at the end of each month.
7. Develop What If Scenarios.  List different scenarios that could happen and how you would deal with each one, i.e. job loss, sickness, death, new baby, loss of health insurance or other benefits, car repair, etc.
8. Get Your Financial House in Order.  Organize financial papers and store in a centralized secure location. Backup financial documents and records saved on your personal computer.  Make copies of all personal documents and store in a waterproof fire proof safe.  Develop a will and update beneficiaries for life insurance policies.
9. Get insured. Make sure you have adequate health, auto, life, disability and long-term care insurance.
10. Don't stop at retirement. Don't just plan for your retirement, plan for your children's retirement. If you plan for your children's retirement or your grand children's college education this will ensure you have more than enough money to retire and enjoy your golden years.
11. Do better than your parents.  If you parents retired at 65 or had to work until they were 70 and had nothing to show for it, do better than your parents. If you retire at 55 be sure you have at least enough money to live on for 20 years.
12. Further Your Education.  Take training classes or get a college degree to increase your skills set and salary. Plan to take at least one training course every year during your career to stay current with industry standards and technology advances.
13. Consult a professional.  Contact a financial advisor or financial planner to help you determine your financial goals, where you want to live, the age you want to retire and the lifestyle you would like to have when you retire.