Financial good sense

With the wedding season well underway, many couples are turning their attention from catering plans and invitation lists to life after the honeymoon. Unfortunately, for most couples heading down the aisle this year, planning the wedding may end up being easier than planning their financial future.

Financial planners at Harris Bank are urging couples to take time during their engagement to discuss how finances will affect their future plans. More than 1,163,000 couples filed for divorce in 1997, the most recent year statistics are available, and disagreements over finances played a key role. Surveys indicate that more than 70 percent of couples do not discuss finances before marriage.

Financial planners agree that money is one of the most difficult topics for couples to discuss because the way personal finances are managed can reveal a great deal about an individual's values and goals. Having discussions about spending habits, debt and budgets even before the
engagement stage can save couples a lot of difficulty when the honeymoon's over.

"Money causes problems in marriage because it indicates where our real values lie," said Skip Gianopulos, vice president of financial planning services and head of one of the country's most comprehensive financial planning groups. "Successful financial planning comes down to one of the hallmarks of a stable marriage -- honesty. Couples have problems when one person is trying to hide something from the other, so full financial disclosure between partners is always the right way to begin."

The money management habits of most people are strongly influenced by the way their parents saved and spent money. Most people fall into two categories: those who spend and those who save.

"Couples planning to marry should write down their individual financial goals and prioritize them," said Gianopulos. "Then they should discuss what financial goals they have in common and build on them. After that, everything becomes a matter of negotiation and compromise, much like the marriage itself."

After comparing priorities, short- and long-term goals should be determined. Short-term goals could include anything from saving for vacations and a new car, to buying a computer or buying a piece of furniture. Long-term goals may include purchasing a home or allocating money
for college tuition. Income can be set aside for each set of goals by establishing a plan.

Gianopulos suggests that newlyweds establish a "spending plan" rather than a budget. The spending plan should take into consideration established monthly expenses to be paid for from a joint account to which both partners contribute.

After deducting money allocated for retirement, designate money for rent/mortgage, utilities, car payments and other expenses that must be paid every month; set money aside for short- and long-term financial goals, and money that will be discretionary.

"It's also very important that both partners have their own bank accounts and money to retain some of their personal spending freedom," he said.

According to Gianopulos, "rainy day" and "sunshine" funds also should be established for emergencies and adventures. "It's always nice to take a spur- of-the-moment trip and not have to worry about it having a detrimental effect on your finances for months to come."

Gianopulos also suggested three ways that couples can protect themselves in case of tragedy:

• Consult with the employer's human resources representative to make
  sure that the beneficiary designations are correct on your employee benefits
  such as life insurance, pension plans and 401(k) plan.
  
  
• Change beneficiary designations on your IRA accounts and other life
  insurance policies.
  
  
• See a lawyer to have wills drafted. These can be very simple at
  first, but they are very important, especially if there are children from
  previous marriages, inheritances or trust powers to be handled.