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Marriage and money: coordination is key

In the second part of Today's special series "Money for Women," Jean Chatzky tells us how to avoid money madness after tying the knot.

Money can be a touchy subject, especially with a spouse.  In the second part of the special "Money for Women" series, "Today" financial editor Jean Chatzky shares how to overcome communication obstacles and make smart money decisions that both you and your husband can agree on.  According to the Association of Bridal Consultants, money is the biggest cause of spats during the first year of marriage. (For the record, sex isn't second — in-laws are). This has, in fact, been the case for as long as I've been reporting on money. The question — and the key to getting away from money as a trouble spot in marriages — is why? Why is it that money is so loaded? Why is it that money gets in the way, rather than helping us accomplish our goals? 

The answer to the first question is that when you enter a serious relationship with another person, you bring your financial baggage with you. If you've always been the sort of person who spends whatever you want and worries about it later, the person on the side has to deal with that behavior. If you're just the opposite — someone who is so worried about having enough tomorrow that you cut corners on just about everything — your mate has to deal with that, too. (Even close friendships sometimes have financial issues; just think about the person who orders the expensive wine, then expects to split the check.)

There are two keys to getting over the financial humps.  The first one is understanding what drives your own money behavior. The second is spending a chunk of time understanding what drives your spouse. You may not condone or even enjoy the way he handles his money, but it will be a lot tougher to deal with if you don't know where it's coming from. Then, follow these steps to ease your transition to togetherness:

Consider a prenuptial agreement 
If this is a second marriage for one or both of you (particularly if there are children in the picture), or if either of you are entering the marriage with significant assets (a family business, an inheritance, a house, a substantial nest egg, etc.), a pre-nup is a must. If you've already tied the knot but you didn't do this, it's not too late. There's a growing trend in postnuptial agreements. A matrimonial attorney can handle the details.

Create a road map
Sit down with your spouse or fiancé and have a discussion about what you want your money to do for you in the months and years ahead. Do you want to pay down debt? Do you need a new car? Do you want to buy a house or apartment and how much do you want to put down? When do you want to accomplish these milestones? And how much is it going to cost you? Once you attach numbers (and a timetable) to these goals, you can figure out how much you need to save each month to make it happen. That tells you how you can live today.

Try separate accounts — or try "Yours," "Mine" and "Ours" accounts
Forty-four percent of women, according to a recent Money magazine survey, think it's OK to keep financial secrets from their spouses. Secrets like saying they spent less money on something than they actually did, hiding the fact that they made a particular purchase altogether, or keeping a secret stash of cash or secret bank account (something one-quarter of women have admitted to doing). Clearly, you're better off if you can avoid this sort of lying. One way is to give yourself a discretionary stash that you're not responsible for reporting on. “Yours,” “Mine” and “Ours” accounts are a way to do this. You put your salary in a separate checking account, he puts his in a separate account, and you each deposit the same percentage of your salary into joint checking, from which you run the house. More and more couples are running their lives this way. According to a survey of 1,200 households by the Raddon Financial Group in Oakbrook Terrace, Illinois, today 48 percent of married couples have separate checking accounts, up from 39 percent in 2001.

Coordinate and save
It's not necessarily possible for two to live as cheaply as one. But there are ways you can coordinate and save yourself some money each month. First, your benefits:  if you and your spouse both have health plans at work, figure out if it pays for you to put him on your plan or vice versa.  Next, your investments:  when you are investing, you need to make sure you're diversified as a couple.  That means you both can't be overly aggressive, you both can't be overly conservative, and your joint holdings in a particular investment shouldn't top 10 percent. Look at the small stuff as well. Would you and your spouse be better off swapping your two cell phone plans for one joint one with more minutes and free calls to each other?  (Go to myrateplan.com to figure that one out).

Don't adjust your withholding
If you and your spouse are both working, the temptation upon getting married is to change the withholding on your W-4. Don't.  You'll end up with a tax bill at the end of the year. 

Protect your credit score
When you're married, a bad credit score doesn't just impact you, it impacts both of you. It can get in the way of your being able to secure apartments to rent, mortgages, car loans, decent credit card interest rates, even decent rates on homeowners and auto insurance. Above all, make sure you pay your bills on time. Late payments sabotage a credit score quicker than anything else.Relieve financial tension
Finally, as you work through all of these issues, see if you can come up with a way to eliminate the financial tension in your relationship. Some couples find it works to schedule conversations about money, often, on a weekly basis. Others draw a line in the sand, deciding not to spend a certain amount of money before discussing it first. Still others agree to keep certain financial information — how much you really spend on shoes, for instance, or how much he spends on power tools — to themselves, because they know it drives their partner to distraction.  Above all, solid communication is the key.