10 Financial Laws for Couples

Just as there are traffic laws to keep cars safe on the road and road signs for clear communication, there are also financial laws which, when followed, will keep financial and relationship patterns open and flowing in a consistent, predictable pattern. But, breaking a financial law may mean getting blindsided, resulting in emotional and financial injuries.

1. Set a specific time each week to update your finances. Some couples choose a Thursday evening, giving them visibility to their finances prior to the weekend so they can decide whether to go out for a date night or enjoy an inexpensive date at home. Others may choose a Saturday morning before doing their weekly grocery shopping. No matter what day is best for you, do not let more than 10 days go by without updating or you risk breaking Law #3.
2. Spouse weekly update. One spouse can update the finances and pay the bills if one is better at it or likes to do it (See Law #1). However, both spouses need to participate in a weekly finance update, where both see what bills are already paid, what bills still need to be paid, how much is left over and give input if you are on track with your goals. This can take as little as 5 minutes. This keeps the relationship equal. Otherwise, if one spouse controls they money and how it is spent, the exchange can evolve into a parent-childrelationship that jeopardizes a couples’ well-being, as one day the “child” grows up and eventually leaves the home (or in this case, the relationship).
3. Know your balance before you go shopping. Most couples overspend because they do not realize their balance is low. For large purchases, wait 24 hours first before making the purchase and always compare 3 of the same items before making the purchase.
4. Set a cost limit on purchases & consult your spouse if the amount is over your limit. (Example: Limit is $50. If item is over $50, rule is to talk with spouse and come to agreement before purchasing.)
5. Personal spending money. Each spouse needs to have a personal allowance each paycheck or each month to spend any way s/he would like—even if it is $5 when things are tight.
6. Housing Rule of 28. Housing will be among your greatest expenses. Set a goal not to spend more than 28% of your gross monthly income for housing, rent or mortgage payments. (Gross amount is all income before taxes are taken out). Do not spend more than 36% of your monthly paycheck for a housing payment; otherwise, you will quickly go into debt with all other expenses. Calculate this amount to know what you can afford in a monthly payment BEFORE you go house shopping. Do not leave this amount for the bank or realtor to decide for you. When we shopped for our first home, we felt a lot of pressure to exceed this amount from sellers, loan agents, and realtors – it almost made me doubt this rule. However, thanks to a confirmation call with my AFC^® colleagues, we stuck to the Rule of 28, kept looking for houses in our price range and we found it! Thus, when the torrential waves of economic difficulties came, we could afford our housing payments when so many others had to sell. Stick to this guideline. You will not regret it. (Example: Paycheck= $3,000 gross income per month x .28 = $840 or less for rent or mortgage payment per month. How much gross monthly income do I need to make to cover a $1,800 house payment? $1,800 divided by .28 = $6,430 per month.
7. Car Loan Rule of 10. Do not spend more than 10% of gross monthly income on car loans. This is for TOTAL car loans together.  Example: $3,000 x .10 = $300 or less for one car loan. For two cars, this would be $150 each or any combination to equal $300 total.
8. Extra money. Have a plan before it comes. Together, write down your larger needs then wants in order of priority. So when extra money comes in, such as tax return or job bonus, you both are on the same page as to where the money goes first. This way, disagreements, high emotions, and power struggles are avoided. (Example: “Our first priority is to save $_____ for an emergency fund, then, to pay off the credit cards 1 & 2 for $_____, then save $_____ for the vacation, then save $_____for down payment on house”).
9. Reduce or pay off personal debt before marriage. Get out of debt as much as possible before marriage. Work hard to pay off all personal credit cards and debts before marriage. Debt is a heavy liability in a new marriage so consider it very carefully if your future spouse has a lot of debt. Debts such as credit cards and personal loans with few or no assets to show for it may indicate a spending/emotional problem which needs to be addressed before marriage.
10. Vocabulary and Conversation. When talking to a spouse about finances, never say: “This is my money, I earned it, and I say how it is spent.” How money is spent is decided together as a couple. If spending habits need to change, use words to explain your perspective:
    1. “I feel there is something we need to address.”
    2. “We might consider waiting 24 hours before making that purchase.”
    3. “I wonder what we can do to decrease our expenses and increase our income to find ways to pay down our debt.”
    4. “I noticed that you paid for everyone at the restaurant last night, could you help me understand why you chose to take the bill when things are so tight for us right now?”
11.  Bonus: Overcoming Financial Disagreements. When discussing a financial concern, write the name of the difficulty down on a large piece of paper. Place the paper between the both of you. Now list all frustrations about the problem around the name of the problem. Done? Now turn over the paper and brainstorm ALL possible solutions on the back randomly–the goal is 25. Don’t dismiss your partner’s suggestions, even if it seems ridiculous. Simply list all possible solutions. The paper represents the problem; it does not represent you or the other person as the problem. Direct all focus, energy, solution and even negative emotion to the paper that is the problem, not toward the other person. Then, together, circle the top three (3) possible solutions. Now take a break and let ideas settle and agree on and set a time that you will come back within 3– 24 hours. This will give you time to gather financial or other information to help solidify a solution. At the appointed time, counsel together again to resolve the issue. It may take more than one sitting to reach a solution. An AFC^® (Accredited Financial Counselor) is a tremendous resource to offer financial insights that have not been previously considered and can also help keep the conversation focused, open and equal.

Best wishes in all your future financial endeavors!

Guest Contributor: Shara Young is a graduate of USU, an AFC^® for the past 15 years and a previous military spouse, contributing to Family Support Centers and financial education classes in Idaho, California, and Virginia. Her At-A-Glance Budgeting Technique is published in Financial First Aid by Alena C. Johnson and helps couples work together to keep finances open, updated and transparent. She currently teaches financial education classes to women, couples, groups and families in Utah, USA.