finances LOVE & fter all the excitement of the wedding celebrations and perhaps jetting back from their honeymoon, most newlyweds hit their financial reality wall. When the financial rubber hits the road — or runway — so does the possibility of problems. Arguably one of the most important subjects throughout a marriage is money, yet it is a subject that is not often discussed in detail by engaged couples. There are great resources out there about money management, including Kevin O’Leary’s book Cold Hard Truth on Men, Women & Money; in it he stresses that couples must communicate about finances. Brian Shumak, President of Brian Shumak Financial Services, is an independent financial service advisor who has worked with newlyweds in the GTA for more than two decades. Observing how couples handle the topic of finances, he urges couples to discuss the following key points to clear the financial air and go into the “business” of marriage with eyes wide open. A By Kathi Stevenson Money { versus Vegas gambling junkets. This doesn’t mean that you run for the hills if there is “bad” debt— rather it is a platform for constructive communication about a future action plan. YOURS, MINE & OURS — TALKING POINTS ABOUT FINANCES ASSETS — HERS & HIS Do you have any assets? What are they and how did you get them? What is to become of the assets once you marry? Are they to be sold and the proceeds used by you as a couple, or are they going to continue to be held separately? How will you handle a future inheritance? MONEY RELATIONSHIPS Explore the relationship you each have with money. Do you buy on a credit card to get the points and pay the balance at the end of the month? Do you always pay with cash? Do you keep every single receipt and put it into a log? Typically one spouse is better at managing money than the other, but you must share the duties so each person knows what is going on. This helps eliminate finger-pointing. DAY-TO-DAY BANKING DEBTS — HIS & HERS Do you have any debts? What are they and how did you get them? There is a big difference between acquiring debt for schooling There are basically three options here. 1. You each keep a separate account and divide up the expenses monthly. You each maintain your own bank account and you set up a joint account. All household expenses are paid from the joint account with each partner contributing to it. The contribution can be proportionate to income or can be split equally. The benefit here is that each of you has your own money, a “slush” account. A drawback can be when an expense occurs that one person can afford and the other cannot, for example, a vacation. 2. You put everything into a joint account. Although you want to share everything, a good idea is to each set up a separate account to be your “slush” account. The difference between this option and option 1 is that in option 2 you arrange for an automatic transfer of X$$ to each “slush” account. In option 1 you transfer X$$ to the joint expense account. 3. You create some combination of the above options. There is no right or wrong way, only what works for you as a couple. The great thing about a “slush” account is that you each have money that can be used without justification. BUDGET YOUR MONEY Managing money and budgeting money are two different things. Budgeting is like dieting — most times it doesn’t work because of inability to stick with it. Choose a budgeting system that works for you, such as the system outlined by Stephanie Holmes-Winton in her book Spent. The basic premise she proposes is figuring out how much you have to spend on something rather than telling you to give up something. This subtle difference allows you to become empowered, which helps you stay on track. One way of looking at this is that you are going into business together and as partners you need to discuss everything that affects that joint business, including how to protect each partner in case the business fails. In this case, that business is marriage. WE 54 Wedding Essentials 2013