How To: Vow to talk about money before marriage - Indianapolis Star How To: Vow to talk about money before marriage - Indianapolis Star

Sunday, June 3, 2012

How To: Vow to talk about money before marriage - Indianapolis Star

How To: Vow to talk about money before marriage - Indianapolis Star

Newlyweds and couples moving toward marriage, take note. Love, as it turns out, is not all you need.

Not if your goal is to avoid the No. 1 reason marriages end in divorce: Money problems.

"Mature, responsible conversations about money are a sign of a marriage that's going to be healthy and wonderful and enduring," said Brooke Salvini, a certified financial planner based in San Louis Obispo, Calif. "If you can't talk about money when you are dating, that is a red flag right there."

To get the conversation rolling, here are seven steps experts recommend to steer clear of marital money troubles:

Disclose financial records.

Before corporations merge they get a close look at each other's financial records. Take the same approach before you get hitched.

Swap statements for your bank accounts, credit cards, student loans, retirement accounts and so on. Also share credit reports and FICO scores.

"Not only can you start to put together a balance sheet of what the two of you own and what your debts are, you can start to discuss 'Do we want to combine our checking account?' " Salvini said.

Discuss financial goals.

A huge part of getting in sync with your spouse begins with discussing major life goals and the necessary financial commitments.

Discuss short-term goals, such as paying off credit card debt, and then craft a budget that sets you clearly on a path toward your goals.

Budget spending.

Failing to create and stick to a mutually agreed upon budget can lead to marital strife.

It doesn't have to be complicated. Start off by listing monthly income. Add in interest earned on money-market accounts and dividends from any investments. Then add up all expenses, including car payments, rent, groceries, gym membership and utilities.

If you're making more than you spend each month, begin planning how to set aside money for long-term financial goals. If not, consider ways to cut spending.

Treat your money as "our money."

Many newlyweds continue to see the money they earn individually as their own. They keep separate bank accounts and pitch in, perhaps equally, or not, to pay bills.

That can lead to problems, especially if one spouse earns a lot more than the other, said Anthony Chambers, a clinical psychologist at the Family Institute at Northwestern University.

If both spouses work, he suggests they arrange for their paychecks to be deposited directly into a joint account that's used to pay all shared expenses.

If they feel they need to have some of their money in a separate account, that's fine. But Chambers said the funds should come from the joint account so both spouses know where the money is going.

Keep credit cards separate.

It's not necessary to make your spouse a joint accountholder on your credit cards, especially if he or she has a poor credit history, which can drag down your own credit rating. Instead, make your spouse an authorized user of your credit cards. This avoids potential impact to your credit rating.

Don't split costs 50-50.

In marriage as in most other scenarios, money is power. Although splitting household costs down the middle may work early on in a relationship, it can breed resentment when one spouse makes a lot more money than the other.

"Very few things in marriage are exactly 50-50," said Chambers. "That can really start to bring up all of these other issues of fairness."

Talk about spending.

Talk about spending to find out how your habits match up. One person might have grown up in a family that counted every penny. The other might part far more easily with money.

Even small differences can become wedge issues later on.

Spain financial rescue priced at $A577bn - Business Spectator


If Spain cries out for a financial rescue, analysts say the price could be €150-450 billion ($A191.94 - $A577.89 billion) or, in the most worrying case, simply "unknown territory".

Prime Minister Mariano Rajoy's conservative government refuses even to countenance a bailout.

But markets are remorseless.

Ten-year government bond yields, or interest, pierced 6.7 per cent this week.

When compared with German debt, the extra rate charged on Spanish bonds hit 5.48 percentage points on Friday, a euro-era record.

Latest figures showed a net €97 billion of investors' money fled Spain in the first three months of the year - the highest on record.

In such an environment, how can Madrid finance a banking rescue - stricken lender Bankia alone is seeking a total of €23.5 billion - and pay for the state's new expenses and existing debts?

"Against this background, it now appears all but inevitable that Spain will require a considerable bailout package to support its banks, if not the wider economy," said a report by London-based Capital Economics.

The task is daunting: Spain's economy is the fourth-biggest in the eurozone and accounts for 12 per cent of the region's output - twice that of heavily-indebted Ireland, Portugal and Greece combined.

David Mackie, chief economist for Europe at JP Morgan, said Spain wanted the European Central Bank to buy its sovereign debt and for European rescue mechanisms to intervene directly in its banks.

"Spain looks to have gotten to the point where it cannot bear the burden alone," he said.

European officials say Madrid would have to negotiate a formal rescue, however, even if the money only goes to the banks.

Whatever the format, the price could be high considering Spain's size.

A bailout of Ireland cost €85 billion, one for Portugal was €78 billion and Greece, so far, €292 billion.

Spain's financing needs this year are estimated at 86 billion euros, of which half has already been raised.

In addition, Spanish regions have debt financing costs of 36 billion euros, to which must be added €15-€16 billion in deficit financing, according to Spanish media.

Banks, heavily exposed to the collapsed property sector, could need 60 billion euros, according to the International Institute of Finance.

But a bailout would have to tide Spain over for several years.

A report for clients by HSBC calculated that over three years the costs would be €450 billion, of which €100 billion would go towards the banks.

It says, however, that such a scenario is unlikely because no-one wants to see Spain being thrown an international rescue line as it would signal that the euro crisis had reached an entirely new level.

JP Morgan tips a bill of €350 billion, including €75 billion to cover the financial sector up to 2014.

Edward Hugh, economist in Barcelona, was more pessimistic about the state of the banks.

"Some sort of attempt to rescue Spain is likely and it is likely to come in July," he said, after the June 17 Greek election and once the €500 billion European Stability Mechanism is operational.

"Up to now, they have been hoping, I think, that they could be doing just something like recapitalisation of the banks, which in my opinion could be anything up to 200 billion euros," Hugh said.

The cost of a Spanish financial sector rescue will mount if external auditors decide that banks should increase provisions against home mortgages, the analyst added.

"What they don't want to do because of the size of it is to take Spain out of the market altogether. The whole situation is pushing them towards this. We are really entering unknown territory."

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