In last week’s column, I discussed how establishing a sound financial footing will also provide a strong foundation for a great marriage.  That’s especially important because more than 75% of marriage difficulties have some roots in financial problems.  When couples share common financial goals and work as a team to reach those goals, the two people have a unique bonding experience.  The financial basics included sharing your financial information, setting goals and establishing good habits.  If you would like to review this article, go to the ‘In the News’ section of www.welchgroup.com and click on ‘Stewart’s Weekly Articles’.  This week, I want to ‘drill down’ on the habits necessary to achieve financial success.

Once you have decided on your goals (last week’s success assignment), it’s time to take the necessary first steps to begin making those goals become a reality.  Here are the three basics you need to make this happen:

1. Build a budget.  For traditional financial budgeting, you should buy a software package such as Quicken (from any office supply store or online at www.quicken.intuit.com) or you can print off a manual form from the Resource Center at www.welchgroup.com.  But allow me to offer you an unconventional budgeting system for those of you who detest the idea of tracking a traditional budget.  Set up three separate checking accounts.  Account #1 is for giving, saving and investing.  Account #2 is for regular and mandatory bills such as rent, utilities and insurance.  Account #3 is your ‘fun money’ account for such things as entertainment, vacations and discretionary spending.  Make all deposits into Account #1, then transfer the appropriate amount to Account #2 with any residual money being transferred to Account #3.  As you will see in a moment, this will insure that you are always working towards your goals.
2. Have monthly reviews.  It is important to your financial health as well as the general health of your marriage that you have ongoing constructive communication about your personal finances.  The best way to accomplish this is to set aside one evening every month to review your financial status.   Let’s say that you agree to do this the first Friday of every month.  Your agenda might include bank reconciliation, updating of your Asset-Liability Form (see last week’s article for details), review of goals, and a review of your past months spending versus your budget and finally, a review of expected expenses for the current month.  
3. Give, save and invest.  Here’s where the ‘rubber meets the road’.  To successfully reach your goals, you must put your program on automatic pilot.  I recommend that you plan to give away 10% of all of your income every month.  This can be to your religious organization or to charities.  There’s not enough space here to explain why this is so important to your success so I’ll have to ask you to take my word for it. The answer is buried in the Law of Reciprocity.  My father explained it to me like this, “Give away 10% for 12 months.  If at the end of that time, you think it was a poor use of your money, don’t do it any more”. Next, I recommend that you save an additional 5%-10% as part of your ongoing emergency reserves, using a money market account.  Trust me, you are going to need it sometime in the future.  Set this up so that your bank automatically transfers the money each month.  Finally, I recommend that you invest a minimum of 10% of your total earnings each month.  Your best choice is through your employer’s 401(k) plan, especially if the company makes a matching contribution. Otherwise, set up a traditional IRA or Roth IRA and invest in no-load stock mutual funds. This too, should be set up as an automatic transfer.  Go to www.vanguard.com for research on no-load funds.

The power behind this plan is that it establishes great habits that will strengthen your marriage…ongoing communications about an area that is vital to your marriage and an automated plan for financial success.  While it requires a bit of time and effort, you’ll soon begin to recognize the substantial benefits.  If you want to maintain a successful marriage, having a strong financial foundation is essential.