Free Family Finance

We’ve discussed the impact divorce can have on you and your finances. In this New York Times piece, Ron Lieber identifies four essential money talks to have before tying the knot. The topics of conversation are:

ANCESTRY: One of the first things [Lisa J. B. Peterson] asks clients about is what she refers to as their financial ancestry. “It’s looking back at your own personal past,” she says. “How did your parents deal with money, how does that impact how you deal with it, and how might that impact the couple’s relationship?”

CREDIT: While it’s about the least romantic subject imaginable, your credit history holds a chunk of your permanent financial record.

CONTROL: Figuring out who will pay the bills each month may not seem to be an important conversation or assignment.

AFFLUENCE: Here’s another question that tends not to come up during courtship: Just how rich do we want to be one day? Mr. Kuhlman refers to this more politely as the “desired level of affluence.” “Are our career paths going to be something that pulls us together? Or, more often, are they things that will tend to pull us apart, where we’ll really have to be proactive to make sure it’s under control?” he says.

via Your Money – Four Talks About Money to Have Before Marriage – NYTimes.com.

Have a little money & looking for a good time? Researchers have recently confirmed that experiential purchases top material purchases in buyer happiness:

This study provides further support for the idea that experiential purchases like restaurant trips or theatre tickets are likely to beat material purchases like clothes or electronics for our long-term happiness.

Experiences also beat possessions because they seem to:

• Improve with time as we forget about all the boring moments and just recall the highlights.
• Take on symbolic meanings, whereas those shoes are still just shoes.
• Be very resistant to unfavourable comparisons: a wonderful moment in a restaurant is personally yours and difficult to compare, but all too soon your shoes are likely to look dated in comparison with the new fashions.

My wife & I try to put this into action through our gift giving. Tradition may steer me (the man) towards buying her (the woman) material things, such as jewelry, to celebrate our relationship. However, we have aimed our approach in a different direction. We celebrate holidays, such as Valentine’s Day and anniversaries, with mutually enjoyable experiences. By celebrating through nice dinners, weekend trips, and concert tickets, we have stockpiled numerous memories within our young relationship. And those shared memories help strengthen the bond of our relationship. Give it a shot.

via How to Choose Between Experiential and Material Purchases | PsyBlog.

It’s summer and you know what that means. Love (and humidity) is in the air. MSN Money gives…

6 money mistakes newlyweds make:

1. Keeping money secrets – This is a bad plan for various reasons. When ‘two become one’, this includes the finances. If you have money secrets you can not share with your spouse, this is likely a symptom of a bigger problem. As newlyweds, address this early on. Don’t allow this bad habit to become a norm in your marriage.
2. Not having a budget – The budget is the foundation of your finances. Without this firm base, you will always struggle to build anything substantial.
3. Giving one person the financial reins – With only one person in the financial driver seat, the point of contention is moved from ‘Couple vs. the Numbers’ to ‘Oblivious Spouse vs. Aware Spouse’. This puts undue stress on your young relationship. As the old adage goes, ‘Knowledge is Power’. Couples should be equally aware of their financial situation.
4. Dragging debt down the aisle – Plain & simple, debt is risk. Although debt might not be worth delaying a marriage, it is certainly important to address it before you walk down the aisle.
5. Sweating the small stuff – By having a financial plan, you put yourself in control of your money. Subsequently, you begin to act proactively upon your money. This keeps financial events in the ‘hiccup’ realm instead of the ‘crisis’ category. In the end, by being in control, you can absorb the small stuff.
6. Failing to plan for an emergency – An emergency fund is essential. Period. Most experts suggest saving 3-6 months of expenses in this fund. Also, remember to keep it liquid, or easily accessible.  A simple savings account at the local bank works perfectly.

via 6 money mistakes newlyweds make – MSN Money.