Money management in a relationship

New Delhi, April 29: How you handle money at the beginning of your marriage can have an enormous impact on the rest of your life.

"Fifty percent of all marriages end in dissolution and the number one reason for that is financial pressures," says debt expert Howard Dvorkin. There's evidence that the divorce rate has been diminishing for a couple of decades and may be closer to a third than a half. Dvorkin, who runs the Consolidated Credit Counseling Services, in Fort Lauderdale, Florida, has seen many marriages destroyed by money problems.

So, clear up the cash at the very beginning, and you can stop all of those arguments before they escalate out of control and build a prosperous future. Here's how...
Pay off the wedding expenses as soon as possible. The longer the debt lingers, the more it prevents you from accomplishing what you really want. Interest rates are increasing, so any debt you are carrying is likely to start costing more. Look at all the other debts you have as a couple and develop a plan for paying it off.

Develop a bill-paying system that works for you. It doesn't really matter whether you both agree to put all of your bills into the same shoebox, or use the latest in Internet banking, as long as you have a system that keeps you paying everything on time. Couples who are sharing their finances for the first time often wind up paying bills late just because they haven't got organized and that will affect their credit reports and scores.

Focus on your credit reputation. You'll both need good credit scores to buy that first family car or house. If one of you has a clean credit history and the other doesn't, keep those credit cards separate, says Dvorkin. The person who already has a good credit score can help the spouse build a better credit history by encouraging him or her to start with a secured credit card and then getting a regular credit card and making timely payments. Adding the "bad credit" spouse to the "good credit" spouse's cards won't help rebuild the weak credit score, but could hurt the good score.

Keep some checking accounts separate too. If you're both used to earning and spending your own money and have decided to kick in together for family finances, keep three checking accounts. One for each spouse and the household account, to which they both send money to cover shared expenses.

Talk about it all. Come up with a specific amount for purchases that are big and require you to discuss and agree to them together. Below that amount, each can spend the money without asking. New couples should have many discussions about their financial goals, too; it's easier to make the household money work if both partners are committed to the same ideal. Even if one spouse is the money person and the other isn't, set aside some time every month to discuss the family budget so both know where the money's coming from and where it's going. Even the spouse who doesn't manage the family money should know where it is.