Anybody can earn a buck but not everybody can build and sustain a fruitful relationship built on trust and respect. That’s why when we find someone we love and have mutual admiration for each other, this should extend to all areas of life, including your financial situation.
When one person commits financial infidelity in marriage, it can be devastating and immediately erode any sense of trust one spouse has for the other. Much like a person as a brand, reputations take many years to build and only an instant to ruin.
When it comes to money, I always wonder what drives people crazy about it. Do I have a warped sense of it because I haven’t grown up in dire financial circumstances since my parents got on sounder financial footing by the time my brother and I came into the picture? Maybe, but I certainly wasn’t wealthy growing up, either.
To illustrate, my family owned an older Nissan Quest minivan and when the hubcaps fell off on one side, instead of paying the dealership for “authentic Nissan brand replacements,” whatever that means, we opted to head to Wal-Mart and get a matching, discounted set for the other side. That way, you’d see matching hubcaps on one side and a different, matching set on the other.
Unless you’re Sherlock Holmes, you wouldn’t think about the discrepancy because the detail is insignificant and also not memorable enough to stick with you looking at one side and then the next. We did it because we didn’t have the money to fork over for those genuine Nissan hubcaps. That’s how middle class we were growing up.
It’s also why I believe having alignment on money in a marriage is important. Both of my parents saw this as a low-priority item and choose to communicate openly about its insignificance for our budget. They made the decision together to opt for a cheaper solution.
This decision is a mere microcosm, however, of their relationship. So long as open lines of communication exist in a relationship and trust is mutual, there shouldn’t be worry of financial infidelity in marriage.
This post examines three ways my wife and I have learned to prevent financial infidelity in marriage from happening and how they impact our bottom line. For us, our strongest prevention lies in mutual trust and shared financial goals.
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Automating Our Savings
I’m on the wrong side of 30 these days. Many aspects of my life seem to have accelerated and only continue to fly by without my notice. As more time passes, I imagine this trend will only hasten, but that’s my hope if I’ve planned accordingly.
At first blush, you might think I’m talking about being unable to live in the moment and enjoy the small delights life has to offer. When, in fact, I’m talking about certain aspects of my life speeding by on purpose.
When I was young and fresh in a job, I loved waking up on pay day and seeing the money land in my account. To be honest, seeing the money hit the account is still gratifying, but these days, however, I don’t see quite as large of a sum at the close of business every other Friday. Why?
It isn’t because I’ve been demoted or taken pay cuts. Instead, I’ve set up automated money movements to move where my money goes each pay period. There’s no more fidgeting with account transfers, manual deposits, or bill paying. I decided to cut down the incidence of operator error (e.g., me fat-fingering an account transfer or underpaying a credit card bill).
I let my financial accounts handle all the minutiae themselves and turn my attention to higher value life details. And good riddance to those time sucks. If anything, this decision has helped us fight financial infidelity because we aligned on our financial goals and set our priorities on autopilot.
The term “automation” scares people these days and understandably so for some professions. Many see automation as a combination of robots and software replacing their jobs while simultaneously putting their livelihoods at risk.
While a case can certainly be made to worry for that scenario, in this case, as I mentioned above, I refer to making automated transactions work to our benefit. Specifically, what does this entail?
We learned to make automatic contributions by subscribing to the idea of paying yourself first.
We learned in doing this, it removes the temptation to spend and takes any lack of discipline out of the picture. Ultimately, it saves yourself from, well, yourself.
As part of our personal budget plan, we learned to place a significant amount of our take-home pay into our savings.
Currently, we save between 50-60% of our combined salary and plan to maintain this amount going forward. Meeting this threshold requires us to contribute before budgeting money for bills, food, entertainment, or travel.
Because we prioritize buying a house in the near future and retiring comfortably, we put savings contributions as our first budget item and work our way back from there.
We also automate our bill pay to avoid incurring any late fees or penalties. We have learned making automatic deposits into our investment accounts makes this budgeting easier to handle.
At first, setting this money aside was slightly difficult but became an easy habit as time passed.
Make no mistake, automating your savings is simple, but it isn’t always easy. For us, we found our lifestyles easily normed to our remaining budget.
We started fairly big and continue to do so with our on-going contributions. However, phasing into larger contributions by starting small and steadily increasing can serve as a viable route as well.
Automating our savings has helped us to take concrete steps in our financial plan toward buying a house and reaching financial independence. We try not to let our unconscious bias step in the way when assessing our decisions about what to do with our money.
By handing over the reins to our automated transfers, we take our behavioral imperfections out of the picture.
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We Plan For What We Both Want
This second item easily ties into our first lesson.
We had similar ideas for what we wanted out of life but different ways of going about getting it. I cannot understate the importance of having a financial plan.
Having the self-discipline to outline the goals in life you want to achieve and lining up not only your finances, but your day-to-day decisions, to accomplish your goals are necessary traits for reaching any significant milestone.
We learned to map out the major milestones we want to accomplish and make decisions to support these becoming reality. One example being the automation of our savings mentioned above.
We have ambitions to buy our first home together in the next 12-18 months but also want to keep a firm eye on our future by prioritizing a safe and comfortable retirement.
We will also have to repay a reasonable amount of student loans my wife carries from medical school and replace some aging vehicles with some newer ones. Not to mention what kids will take to manage financially.
Fortunately for the loans, we learned how student loan refinancing works and used Credible to lower our debt burden to a more manageable level. Their service helped to cut our monthly loan payments in half for the 6 months we carried the note.
While we appreciated the financial flexibility refinancing offered us, we chose to extinguish the outstanding balance shortly after our wedding. We combined the gift money we received with some other savings we had set aside and submitted our final payment to pay off the student loans.
The decision worked for us and now we’re in the middle of refinancing my wife’s second batch now that she’s finished with residency and the loans have come due. We will use Credible again to find the best refinancing rate to fit our needs.
Much like our situation presenting an opportunity to refinance loans, everyone faces different life circumstances in terms of jobs, family structure, and priorities. Just because these differences exist doesn’t excuse not having a financial plan if you have goals in mind.
One common theme which threads these various life scenarios together: making regular, sizable contributions to your savings because we know this underpins everything else we want.
Luckily, we learned to make a financial plan, meet it by automating our savings, and letting passive investments store the majority of our wealth.
We balance all of these items with the understanding life offers competing priorities and perpetual FOMO (fear of missing out).
We can’t keep pace with the Joneses, so we don’t try. We set our priorities as our focus and feel satisfied as we work toward accomplishing them.
Merging Our Finances Where it Makes Sense
For those who have tied the knot, you may remember how the romantic feelings from the blissful day took center stage. As they rightfully should. What you may also remember, at least if you were like us, was eventually drifting back down to earth and rejoining reality.
When it happened, you may also recall the need to file a good deal of paperwork. You’re merging lives and everyone wants proof- there needs to be an audit trail!
Not to mention the marriage license, and name change form depending on the number of financial accounts the two hold, you could be in for 6-12 months of calling 1-800 numbers and speaking to customer service agents. Talk about a buzzkill.
It turns out getting married comes with a lot of administrative work required to:
- add authorized credit users
- file requests to change direct deposit allocations
- change your filing status so your Form W-2 will reflect an accurate tax situation
- combine bank accounts
- adjust your life insurance beneficiaries
- change inheritance rights on investment accounts, and much, much more.
For us, we had to learn just how much of our financial lives we wanted to merge. Purely based on anecdotes from our friends and family, not all couples have completely merged their finances.
Some maintain entirely separate accounts and contribute toward shared expenses like rent, utilities, food, travel, and just about anything else. We also know some with a shared bank account and have all money flow entirely through it from both individuals.
For us, we chose a system where the vast majority of our income directly deposits into a series of shared bank accounts where we pay for all the usual trappings of married life. We didn’t get here overnight, however. It took a lot of decision-making, reasoning, and trust.
We debated just how to handle our money because both of us had grown accustomed to watching out for our own financial well-being. We settled with a system where we both keep a very small percentage of our respective incomes in separate, legacy bank accounts from before we married.
This allows all of our communal expenses and investment contributions to be borne by both of us since we both stand to benefit. We’ve hit a few snags along the way with minor administrative hiccups (e.g., when paychecks hit bank accounts, bill payments, etc.), but the arrangement has largely benefited our finances and relationship.
Currently, we allow our automated savings contributions to represent a big portion of our incomes and pay for expenses as we go along.
Last year, we decided to establish a monthly budgeting meeting to make sure we’re handling our money wisely and making progress toward reaching our shared financial goals.
Learning to Become One Unit and Preventing Financial Infidelity
During our lives, we’ve experienced many life lessons which have guided our ways of thinking. Separately, we absorbed the behaviors of our parents and developed many foundational habits.
During our formal education, we continued this learning through encountering new challenges and finding ways to come out ahead. Together, we’ve made solid progress molding our lives together and learning how to think about each other and what lays ahead.
This thinking and action plan has gone a long way toward preventing financial infidelity in our relationship. I can firmly say these three actions have laid a solid foundation for our marriage and allow our trust in each other to stand the test of time.
I sometimes joke I don’t believe in having a better half by making the argument one and one make two. After almost two years of marriage, I still see this as true, but recognize the metaphor of two separate people becoming one.
We provide balance to each other and work together with our different styles. We’re both whole people and we certainly give more than half of ourselves to each other and the things we do.
About the Site Author and Blog
In 2018, I was winding down a stint in investor relations and found myself newly equipped with a CPA, added insight on how investors behave in markets, and a load of free time. My job routinely required extended work hours, complex assignments, and tight deadlines. Seeking to maintain my momentum, I wanted to chase something ambitious.
I chose to start this financial independence blog as my next step, recognizing both the challenge and opportunity. I launched the site with encouragement from my wife as a means to lay out our financial independence journey and connect with and help others who share the same goal.
I have not been compensated by any of the companies listed in this post at the time of this writing. Any recommendations made by me are my own. Should you choose to act on them, please see my the disclaimer on my About Young and the Invested page.