A simple plan of money management that has helped thousands of couples avoid financial warfare.
“Our Money”: Building Unity
The first foundational stone in developing a financial plan is to agree that after marriage, it will no longer be “my money” and “your money” but “our money”. At the heart of marriages is the desire for unity. “For better or for worse,” we intend to live life together. The implication is that we will share our income and work as a team in deciding what to do with our money. Incidentally, this also means that his and her debts will become “our debts”, and we have the responsibility to develop a plan to repay these debts. It also implies that his and her savings will become “our savings”. If you are not ready for this kind of unity, then you are not ready for marriage.
Saving, Sharing, Spending
The second step in developing a financial plan is to agree on a percentage of income that you will save, give away, and spend. There are essentially only three things you can do with money. You can save it, you can give it away, or you can spend it. Deciding the percentage that you will allocate to each of these categories is an important step in making a financial plan. His and her debts will become "our debts".
A“10-10-80 Plan”is suggested
Save and invest 10 percent of your net income. The first purpose of saving is to have emergency funds in case of sickness or loss of job. The second purpose of saving is to pay off any credit card and consumer debts that the two of you may have. The third purpose of saving is in order to make major pur-chases such as home and automobile. (Retirement plan is offered by their employer.)
Another 10 percent is to be given away. The purpose of giving is to express gratitude for what has been given to you. The ancient Jewish and Christian traditions encourage the giving of 10 percent of one’s income. The happiest people in the world are not those who have the most money but those who have learned the satisfaction of giving to help others. An early Christian text says, “It is more blessed to give than to receive.”
That leaves 80 percent to be divided among mortgage payments (or rent), utilities, insurance, furniture, food, clothes, transportation, medicine, recreation, etc. How this is distributed is your decision. The more you spend on housing, the less you have to spend in other areas. The most common mistake young couples make is to purchase a house that is beyond their income.
Before marriage, it is difficult to know the exact cost of housing and utilities and many of the other categories listed above. I have often encouraged couples who are contemplating marriage to find a couple who has been married about three years and is living in an apartment or house similar to what you would contemplate buying or renting. Let them share with you the approximate cost of housing and utilities.
Finance is one of the most important factors affecting quality of a marriage and thus, plan for handling money in a relationship matters, too. This is a decisive factor influencing long-term development and harmony of a family and a couple.
Comment