(BPT) - Thinking about combining finances with your significant other? Whether you're getting married or just thinking about getting serious, talking about money can help couples understand each other and avoid unhappy surprises down the road. Here are five reasons why talking about money can enhance a relationship.
It makes couples happier.
Talking about things like spending, saving and debt may sound business-like and unromantic, but financial experts agree that money is a frequent topic of arguments in many relationships. In fact, according to a survey by the American Psychological Association, almost a third of adults with partners reported that money is a major source of conflict in their relationship.
"What I see when talking with couples is that learning how to resolve money disagreements - and there will be disagreements - helps build important relationship skills," says Daniel Prebish, director of Life Event Services with Wells Fargo Advisors. "Those skills will be valuable both at the beginning of a relationship and likely for a couple's entire time together."
It helps couples connect by understanding what's going on.
Couples should discuss pros and cons of combining finances versus keeping finances separate. According to research by Wells Fargo & Company, about half of couples choose to combine accounts, while the other half prefers separate accounts. Regardless of where you and your significant other fall in this spectrum, both people in a relationship should understand how their financial habits impact - positively or negatively - the life they are building together.
It helps couples track their short and long term financial goals.
Be open with your significant other about your full financial picture. Questions that can help open the door to meaningful conversations include:
1. Are we paying ourselves first?
2. Do we have a safety net?
3. Are we paying all our bills on time, every time?
4. Have we reviewed our insurance needs in the last year?
5. Do we track our spending to know where our money is going every month?
6. Are we paying down high-interest-rate debt first?
7. Do we know where our credit stands?
8. Are we saving for retirement?
It helps couples afford the "extras" that make life fun.
Building a solid financial future shouldn't mean forsaking enjoying life. When couples have a common understanding of how they'll prioritize and manage their day-to-day finances like housing costs, grocery and utility bills, it's easier to figure out where splurges fit in.
It helps avoid financial surprises.
Hearing your friends shout, "happy birthday" is a welcome surprise. What's not welcome is suddenly discovering you can't afford to pay this month's bills or that retirement is farther away than a pot of gold at the end of the rainbow. Being up front about money issues and sharing complete financial information with your significant other helps avoid financial surprises that can add unnecessary stress to a relationship.
While discussing money may not feel romantic, it certainly is emotional. So how do you get started? Here are tips:
1. Admit the conversation can feel awkward, but commit to having it anyway.
2. Pick a mutually agreeable time. Your candle-lit Valentine's dinner may not be the right setting. Pre-arranging the conversation will help ensure both people are mentally prepared.
3. Be open with your significant other. Share your values and opinions about spending and savings habits and goals you would like to achieve together.
4. Work at it. Commit to an annual meeting to talk about money, credit and whether you're on track to achieve your financial goals.
By opening the lines of communication, you can get on the same financial page before joining financial forces.
(This article was written by Wells Fargo Advisors and Consumer Lending)
Wells Fargo Advisors is a trade name used by Wells Fargo Clearing Services, LLC and Wells Fargo Advisors Financial Network, LLC, Members SIPC, separate registered broker-dealers and non-bank affiliates of Wells Fargo & Company. Wells Fargo Consumer Lending Group provides products and services through Wells Fargo Bank, N.A. and its various affiliates and subsidiaries. Wells Fargo Bank, N.A. is a bank affiliate of Wells Fargo & Company.
Findings were a part of the 2016 Wells Fargo & Company's "How American Buys and Borrows" survey. Over 2000 American adults ages 18 and older were surveyed. Survey results were not published in their entirety.
You may think that creating a household budget is as simple as adding all your income and subtracting all your expenses, but there is (or should be) quite a bit more to the equation. When you only factor in your current earnings and current expenses, you’re not planning for the future. These three steps can help put you on the path toward better finances and a budget that works for your lifestyle.
3 Steps to a Budget that Works
(Family Features) You may think that creating a household budget is as simple as adding all your income and subtracting all your expenses, but there is (or should be) quite a bit more to the equation.
When you only factor in your current earnings and current expenses, you’re not planning for the future. That means any financial goals can be easily deferred, and you may be overlooking the opportunity to shift your spending habits. These three steps can help put you on the path toward better finances and a budget that works for your lifestyle.
Beyond simply adding and subtracting a list of income and expenses, taking into account your priorities and goals can help ensure you create a practical budget that works. Find more tips for creating an appropriate financial plan that fits your personal goals and lifestyle at eLivingToday.com.
Navigating a Financial Emergency
Life’s financial emergencies happen, but 6 in 10 Americans cannot cover an unexpected $500 bill without selling something or borrowing money, according to Bankrate.
“When you don’t have cash for something you need, there are many different financing options available. However, few realize that many of these options can lead to a debt spiral that can be difficult to pull out of,” said Richard Carrano, CEO of Purchasing Power, an employee purchase program offering consumer products and services through payroll deduction.
Understanding your financing options can help ensure you make the best choice to meet your short-term needs without compromising your long-term finances.
Credit cards: Chances are, even with a shaky financial history, you can find a creditor willing to offer you a line of credit, but you’ll likely have a steep annual percentage rate that accrues each month. Furthermore, if you’re unable to repay more than the monthly minimum, you could end up carrying that debt for years before it’s fully paid down.
Employee purchase programs: Research shows that financial stress at home regularly impacts employee productivity at work. This leads many employers to offer an employee purchase program such as Purchasing Power, which allows you to buy what you need through automatic paycheck deductions over a 12-month period. There’s no credit check, zero interest and no hidden fees. There’s also a free financial wellness platform to help with budgeting, credit reports and personal coaching. Learn more at PurchasingPower.com.
Rent to own: With rent-to-own products, you pay a monthly principal amount plus service fees and taxes for a period of time, up to completing the rental agreement and owning the item outright. While the monthly rate makes items like appliances and furniture immediately accessible, renters can end up paying as much as three times the retail value of an item.
Payday/Title loans: Essentially, these loans function as a loan against a future paycheck or your vehicle. They often come with high percentage rates and fees, as well as short repayment schedules. Rely on these loans only if you can cover the entire loan and associated fees by the designated due date.
Whatever option you choose for emergency financing, understanding the repercussions can help you long-term.
Photos courtesy of Getty ImagesSOURCE:
(BPT) - Sponsored Ad content from Vanderbilt Mortgage and Finance, Inc.
You wouldn't dream of going somewhere you've never been before without first getting directions. So, why would you go through life without a plan to help meet your financial goals?
"An ongoing household budget is essential, whether it's helping you save for retirement or buy your first house," says Eric Hamilton, president of Vanderbilt Mortgage and Finance. "A budget can help you avoid common mistakes along the way by helping you live within your means while planning for the future."
If you've never had a budget before, you may be unsure how to begin. Building a budget can be easy as long as you follow a few simple steps:
* Establish your financial goals. Do you want to be debt free? Buy a new home? Build an emergency fund? Save for retirement? Setting financial goals can help guide the budgeting process.
* Determine your total monthly household income. This should include net income (the final amount of take-home pay after all taxes and deductions) for every working member of the household, including any government aid received, child support, alimony, pensions, etc. Knowing the total income gives you a starting point for your budget.
* Calculate your monthly expenses. It may be helpful to break expenses into categories, such as home, utilities, long term debt, medical, auto, groceries and personal. Personal can include items like clothing, entertainment, dining out, etc. It is helpful to review your cash spending, bank statements and receipts over the past few months to give you a better idea of your spending habits. Check with your bank for tools offered, such as online banking or a mobile app to track of spending on the go.
* Identify where you can reduce spending. After you've assessed your spending habits, you might be surprised to find areas where you can cut back. Small changes in your lifestyle can make a big difference to your budget. For example, instead of buying lunch every day, you could take your lunch to work or school.
* Less spending means saving more money. Be sure to set aside these new freed-up funds and allocate them toward your goals. If you're trying to save for a new home or down payment, view your personal savings as a must-pay fund that's as important as your rent or car payment.
* Periodically reassess your budget. Life is full of changes, such as fluctuations in income and shifting priorities. It's important to go back over your budget from time to time to help ensure you are on track to achieve your financial goals.
Determine if you are financially ready to support a new monthly mortgage payment with Vanderbilt Mortgage and Finance's budget worksheet. Download a copy at www.vmfhomeloan.com.
Vanderbilt Mortgage and Finance, Inc., 500 Alcoa Trail, Maryville, TN 37804, 865-380-3000, NMLS #1561, (http://www.nmlsconsumeraccess.org/), AZ Lic. #BK-0902616, Loans made or arranged pursuant to a California Finance Lenders Law license, GA Residential Mortgage (Lic. #6911), Illinois Residential Mortgage Licensee, Licensed by the NH Banking Department, MT Lic. #1561, Licensed by PA Dept. of Banking.
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