BLOOMINGTON - David Stokes has a joint checking and savings account with his wife, but he also has a separate account for fun money.
"We can kind of do whatever we want. It's our mad money, our fun money. … It's worked well in my relationship," said Stokes, a financial adviser with Edward Jones in Bloomington, who got married in October 2005.
He knows from a professional and personal standpoint that money is among the top concerns for newlyweds, so it behooves couples to take the time to focus on financial matters before the wedding bells ring, Stokes said.
Brides- and grooms-to-be have a lot to think about as they plan the wedding of their dreams, including what to wear, what to eat and where to go for their honeymoon. They're likely thinking about money to pay for the wedding, but they also should think about money matters after they say their vows.
"Your finances are going to affect the rest of your life," said Sandra Beneventi, executive vice president of retail administration for Commerce Bank's Illinois region.
With wedding season now upon us - the three most popular wedding months are June, July and August - local financial experts have some tips for the 2.3 million Americans, including those in Central Illinois, who will get married this year. Simply talking about money is the important first step. Couples also need to learn to budget and save money and make decisions about joint or separate checking and savings accounts.
First on Stokes' list of money lessons for newlyweds is a budget. Talk about each other's spending habits and know if one person likes to spend money on clothes or playing cards, for example, he said.
"You should put that in your budget. Be upfront and honest," Stokes said.
That's where he and his wife's "fun money" comes into play. They each keep out $300 a month that they can spend however they choose. They can spend it all in one month or save it up for a larger purchase later.
Start a budget by listing monthly bills, said John Butler, financial adviser with Chesser Financial in Bloomington. See what's left over for discretionary spending and budget in some money for fun, such as $60 to go out for dinner. Make sure to save, too, he said.
He recommends saving 15 percent of your income, but start small and work toward that amount if necessary. Eventually, couples should have 50 percent of their combined income in certificates of deposits or savings accounts, and then they should look into investments, Butler said.
Beneventi said learning to save money is one of the most important skills. It's easier to save if you start the habit early, she said.
"Even if it's a small amount, put it away and get started," Beneventi said.
Whether couples save their money in a joint account is a personal decision, Beneventi and Stokes said. Factors that come into play include age, financial status and spending habits, Stokes said. If one person's been in the work force and has saved up money already, that person may not feel comfortable combining accounts, Beneventi said.
Instead, they may decide who's responsible for paying which bills, they said.
On the other hand, Butler said one of the biggest problems newlyweds encounter is not combining their money.
"Whatever belongs to one belongs to the other," Butler said. "It's not a question of this is my money, this is your money. … It's got to be a team effort."
That goes to paying off whatever debt each person brings into the marriage, too, Butler said.
"That's part of the budget," he said.
Couples need to give full disclosure on any debt - including credit cards and student loans - before the wedding, Butler said.
Stokes said couples should share their credit reports and talk about how to pay for any debt before they get married. Again, it's a personal preference on who's responsible for the payments, but it might be advantageous for couples to attack debt together if they can pay it off faster, he said.
First, write down all your debts and the interest rates, Stokes said. Pay off the ones with the highest rates that aren't tax deductible - such as credit cards - before student loans and a mortgage, he said.
All of these financial decisions can be difficult for two people who are getting used to living as a newly married couple. Sometimes the hardest hurdle is just to get comfortable talking about money, Butler said. Share your spending and savings habits and talk about how your parents handled money, he said.
Just as in other areas of a marriage, there's some give and take when it comes to money decisions, Butler said. Prioritize what each person wants to buy, and sometimes you need to give in to the other person, he said.
It won't always be easy to make financial decisions, especially if one person is a saver and the other is a spender, Beneventi said. But she said a compromise usually is easy.
A saver and a spender also can balance each other out - the saver can help the spender learn to save and the spender can help the saver learn to have a little more fun with money, Stokes said.
Stokes admits money has sometimes caused a little tension in his marriage. He or his wife may question why the other person bought something, but it's fine as long as the other person spent his or her fun money. On larger purchases, they share their opinions and talk about the potential purchase.
"Sometimes it's difficult and sometimes not everybody's happy with the decision, but at least you came to a joint decision," Stokes said.
Married with money
Tension over money is one of the leading causes for arguments in a marriage and can lead to divorce. Newlyweds who are faced with making financial decisions with another person for the first time can benefit from communicating and working as a team from the start. Here are some financial experts' opinions on how to handle money as a newlywed.
- Talk about your history of spending and saving money and what you know of your parents' habits.
- Write out and share five financial goals.
- Consider combining money into joint checking and savings accounts.
- Share your credit reports.
- Decide how to pay off debt.
- Aim to save 15 percent from each paycheck until you build up 50 percent of your combined income. Then, begin to invest.
- Look into 401k options at work. Consider what the company will match and the taxes you'll pay.
- Stick to a budget.
- Prioritize expenses and compromise - even give in - on purchases.
SOURCES: John Butler, Chesser Financial; David Stokes, Edward Jones; and Sandra Beneventi, Commerce Bank