DOLLARS AND SENSE

One of the principal reasons for discord among military couples involves finances. Conflicts can often arise over how a couple’s income is managed. In order to avoid serious problems involving finances, couples are urged to adhere to a budget that reflects their mutually agreed-upon priorities.

We are familiar with our income and expenses and are committed to maintaining and following a budget.

Many young military couples experience serious financial problems as a result trying to live beyond their means. In some cases, these problems become so severe that their relationship is dissolved. One way to prevent this from happening is to develop and adhere to a spending plan that prevents a couple from spending more than they make.

Whether one or both partners are employed and provide income to the household, the expenditure of that income affects the entire family. Consequently, financial decisions should be made by both partners. In cases where both partners are employed, some couples pool their incomes into one account, while others maintain separate checking, savings, and brokerage accounts, Selfishness can spark arguments and weaken the relationship.

Inflation and housing costs that outpace basic allowances are reported stressors for military families. Frequent Permanent Change of Station (PCS) moves can cause high spouse unemployment and lead to out-of-pocket costs for temporary lodging and lost career seniority. Deployments can add extra child care expenses, while transition to civilian life often brings temporary income loss.

While one partner may have primary responsibility for paying the bills, both partners should be responsible for developing and following a budget. Various military family support agencies offer budgeting and financial-management classes to help couples spend and invest their money wisely. By attending such classes together, couples can develop a joint vision about how much they want to spend and how they want to invest their money.

While military couples receive certain entitlements to aid them and their children (BAH, VHA), such additional income cannot fully offset the additional expenses involved in raising a family. Free publications and information about financial management are also available through a number of governmental and non-governmental organizations.

Have you developed a budget based on your income and expenditures? Do you have a clear idea of each other’s assets and debts? Are your important documents (e.g., bank account and credit card numbers, insurance records, wills) kept in a secure location accessible to each of you? Have you discussed how you hope to achieve certain short-term and long-term financial goals for the future?

We pay our bills on time and we agree upon who will be/is responsible for paying them.

Partners have to decide not only how they will pay their bills (e.g., check, credit card, via the Internet), but also who will be responsible for carrying out this task. Some couples may have to reevaluate in time how they pay their bills and who carries out this task, particularly if they find themselves paying excessive interest charges or are assessed late penalties for not paying their bills on time.

While credit cards are a great convenience, they also tempt people to spend more than they can afford. Studies show that people spend two to three times as much with credit cards as they do with cash. Unfortunately, credit cards are a prime contributor to debt. It is hard enough to pay back the money one borrowed. It is even harder when one adds in interest and late payment fees.

Unfortunately, many people spend more money than they make and fall into a spiral of rising debt and increasing financial pressure. Debt is not only a financial problem, but it also the source of emotional problems that can affect one’s physical and mental health. Symptoms of debt-related stress can include headaches, weight gain or loss, insomnia, anger and depression. Getting out of debt requires planning, time, discipline and sacrifices. It is difficult to get out of debt without adhering strictly to a detailed budget.

What partner is more talented in handling finances? Has one partner ever had a check bounce, incurred high interest charges on credit-card expenditures, or filed for bankruptcy? If this has occurred in the past, what safeguards will the couple initiate to prevent this from happening in the future?

I don’t know exactly how much my partner makes and spends.

Hesitancy to disclose all sources and amounts of income, as well as expenses, can be indicative of an unstable relationship and a source of mistrust. This situation should be addressed directly between the partners and resolved so that mutual trust can be recovered. Without mutual knowledge of a couple’s income and expenses, adequate fulfillment of each other’s household obligations, while not impossible, would be difficult at best and could very likely lead to financial difficulties.

When calculating income, it is best not to factor in “per diem” allocations that are provided to cover travel expenses. Arguments can ensue as to why these funds cannot be used to pay family bills. The lack of government lodging in certain areas where civilian accommodations and meals are expensive can easily consume “per diem” entitlements.

How much do you and your partner each make? What are your major recurring expenses (e.g., entertainment, clothing, hairdressing)? Only when the partners are completely aware of their financial status can they make wise decisions about where they can afford to live, what kinds of cars they can drive and what schools their children can attend.

I trust my partner completely with all of our money (e.g., checkbook, credit cards).

Financial trust presupposes faith and confidence in the present and future stability of the relationship. If a person feels that one’s partner may break off the relationship in the future, that partner will not be inclined to afford complete and unlimited access to one’s assets. In some cases, the signing of a prenuptial agreement prior to marriage can be indicative of a lack of confidence in the future viability of the relationship.

If a partner may be hesitant to grant complete access to all of his or her assets, it would be wise for that partner to discuss the reasons behind this hesitation. A person who feels that a partner might abscond some or all of their funds usually is dealing with a variety of other problems (e.g., lack of a life-long commitment, experiences of being cheated out of funds, infidelity).

In the case of second marriages where there are children from the first, some parents wish to ensure that any existing wealth prior to the second marriage is earmarked for those children in case he/she dies. Ordinarily, such a wish has nothing to do with lack of trust in the new spouse.

Do you agree upon each partner having access to all funds? If you maintain separate accounts in your names, do you still share responsibility for paying the bills and taxes? Do either of you have accounts or nvestments that you have not revealed to your partner?

I am uncomfortable that my partner earns more than me.

As more women enter into professional fields, a number of them may earn more money than their partners. While one person may be proud of his/her partner’s accomplishments, another person man may be threatened by the other partner’s financial superiority. In situations where conflict arises due to income differences, careful consideration should be given to the fundamental love relationship and the subordinate income relationship.

Financial income is only a means, and not an end, to meet our material needs. If financial income or career goals become ends in themselves, they can threaten a couple’s relationship. In such cases, partners need to address this directly in such a way to protect the dignity of each individual while also strengthening their love and commitment.

Do you take pride in your partner’s earning power and accomplishments or do you compete in wanting to equal or exceed his/her income? Does one partner equate making more money with being more important or contributing more to the relationship?

We have yet to decide how much we can each spend without consulting one another.

Some persons have lived alone for a number of years and have never had to consult with anyone about how much money they could spend. This way of operating financially changes when one marries. Some married couples establish a weekly allowance for miscellaneous expenditures and then discuss their bills jointly. Other married couples agree upon a monetary figure that each of them can spend without consulting one another.

By setting an amount that can be spent without consultation, one partner can be prevented from unintentionally putting the couple into debt. Agreeing upon such a figure is particularly helpful in cases where the partners do not come from similar financial backgrounds.

If one partner has more expensive tastes than the other, the couple may discuss what they can afford to buy and seek to compromise in regard to their divergent tastes. Additionally, if a particular partner has difficulty in adhering to a mutually developed budget, that partner should consult with the partner who has primary responsibility for the budget before expenditures are made.

How much do you each think you should be able to spend without consulting one another? Have you discussed how you may have to save a greater portion of your income(s) than you did when you were single to help cover additional future costs (e.g., expenses involved in having, raising and educating children)?

After having discussed savings, investments, debts, assets, powers of attorneys and wills, we believe we have a sound plan for our future financial security.

While some couples are very financially astute, others live from payday to payday without saving or investing money for the future. When an emergency arises, some couples are forced to take out a loan and later find themselves having to deal with high interest charges. Rather than being placed in this predicament, it’s better to meet with a financial consultant and decide how to best invest surplus funds.

In addition to investing in stocks and bonds, some military couples have found that buying a home can be profitable in one area while financially disastrous in other areas. The less money a couple has to invest, the more conservative their investments should be.

Does each partner have a will? Are there debts that one or both of you bring to the relationship? Do you face an ongoing disbursement of funds (e.g., child support, mortgage or car payments)? Have you discussed your attitude about borrowing money from your parents? Are you familiar with the “Thrift Savings Plan” (TSP) and other governmental financial programs? Have you asked friends about a financial planner whom they have found to be helpful and successful in managing and investing their money? Have you discussed setting aside money for your children’s education and your retirement?

We have discussed and are in agreement about the types and amounts of insurance to carry.

Although military personnel are provided life insurance coverage in the event of death while on active duty, additional types of insurance may be procured by military couples (e.g., SGLI Plan). Various health plans are offered for military family members for various levels of medical and dental coverage. Supplemental coverage may be wise to purchase when special needs exist.

As changes occur in the lives of the partners (e.g., children are born, a new vehicle is purchased), insurance coverage will have to be adjusted accordingly.

Advice in regard to life, health, car, and home insurance coverage is available through some company personnel offices and a number of URL links.

Do you understand the differences between various types of life insurance (whole life, term life)? Do you believe you are sufficiently insured in all respects? Have you compared premiums charged by various companies for comparable coverage?