Marriage Preparation

These are actual questions from a very good marriage preparation course my daughter is taking (offered by the United Church of Canada). There is a section on Finances, which I applaud, since that subject can cause more relationships to fail than many other topics.

My daughter sent me the topics, and I have taken the liberty of commenting on the topics in this section of the course. Overall I think there are some good questions, however, there needs to be more frankness between the couple about money.

Here are some of the questions and topics discussed in the money section of the marriage prep course.

How was money managed in your family? How was it discussed, or was it?

I like that question, since most folks learn about money management from what they saw their parents do. If neither partner has any understanding of what their parents did with money, this is an incredible disadvantage. Learning about money on the fly is a scary way to learn about finances.

What is the biggest surprise you’ve learned about each other when it comes to spending and saving?

A really good one. This means you have actually talked about this, you’d be amazed how many married couples didn’t discuss this one before the ceremony.

You cannot enter into this kind of commitment if you know nothing about your partners financial situation.

Think of a picture or symbol that helps you say something about what you value in your marriage.

If the symbol is a big house, that is important. How will this house come about? With no plan going into the marriage, how will this symbol come into being?

Will you have one joint account to cover all expenses, with both spouses putting all their earnings into it or will you have three accounts (one each, with a common one for household expenses). List some reasons for choosing one model over another.

I think either model can work, and I have seen successes doing it either way. The best thing to do is decide this important financial strategy before the rings go on the fingers.

When you are married, you assume each other’s assets as well as debts. Do you know how much your partner owes?

Bingo! This can be an entire day of discussions, and so much needs to be brought forward by both members of the couple.

A healthy marriage is sustained by generosity toward others. How much will you give to charities, the community or other organizations. You may not have much money to begin with, but setting aside an amount for this purpose enriches you both.

Finding out your partner’s ideas on charity and giving is important. If they have a huge family and they like buying presents for everyone, that can really add up. If they like buying dinner for friends, is the other partner OK with that (and can you afford to do that in the first place)?

I have heard more than one young couple complain they are going in debt having to attend friends weddings, does that make sense? Best talk about that one quickly.

How indebted are you as a couple? If you find, after doing your budget, that your level of indebtedness worries you, many provinces and states have governmental organizations that can help protect you from creditors through a financial proposal process that allows you to repay your debts in an orderly fashion. Do an internet search to find these numbers.

WOW! I read this and was very pleased to see it. This is what this section is all about. If you do not have the number that is how much you owe (after the wedding and associated expenses are paid), or are above water, you are ensuring future failure.

Not to cast a shadow on things, but remember also, that should you get divorced and you are indebted as a couple, the debt is split between the two of you. This includes debts that either partner brought into the marriage (unless excluded by a legal statement of some sort).

Name a financial milestone that you have reached together. How did you celebrate?

Did you blow a big wad of money to celebrate? Do you celebrate these types of things, or simply smile and move onto the next challenge?

Other Financial Marriage Preparation Topics

I think this section of the course was good, however it is missing important details. I would love to see some kind of discussion on the following financial topics.

  1. Where are you going to live? Rent? Live with parents? Buy a house? All are all huge financial topics. A course on how to buy a house, how to pay for a house and how to pay for the upkeep on a house would be really important for new couples.
  2. Investing and how this might work. If the couple is lucky enough to have money to invest, teaching them about how to invest is very important. Simply calling your bank and talking to them, will simply lock them into high MER, badly paying Mutual Funds. Maybe their family has a “person”, but is that the right person for them?
  3. Spending habits, do you know how your partner spends money? Are they savers, or do they like to spoil themselves? Does one of you like eating out a lot, and wants to have the latest in stylish clothing? Will you want to have two cars, or only one? Can you afford the planned lifestyle? Lifestyle creep is a dangerous part of a relationship.
  4. Are you going to have one partner stay home if there are children and how will that work? Are you planning on having kids? Not only a financial question, but a big financial decision.
  5. Will one of the partners be in charge of the money? Will this be a shared burden between the two? This had better be decided before you move in together, or this will be a source of many arguments.
  6. How are the finances and investments going to be tracked? Are you going to use Quicken, Mint, Excel, or Pen and Paper? All are quite good, but you need to track it somehow, so that both partners can know where things stand.
  7. How will financial disagreements be resolved? I realize this is a hard one, but discuss this beforehand.
  8. Are either of you planning on going back to school ? Taking a sabbatical from work? These kind of large life changes maybe should be discussed early on in a relationship.
  9. Have you gone grocery shopping together? That is a surprising “adulting” exercise to go through together. Is one of you a list person and the other an impulse buyer? This will teach you both a lot.
  10. Do either of you (or both) have pensions? How is that going to work in terms of your retirement planning? Yes, retirement planning better be an early discussion for a couple, or it will be a big sore point later on.
  11. Emergencies, yes they will happen. Once you have your financial plan, will it work with only 1 of your incomes? What if there is a single income planned, what happens if that disappears? Kind of important things to talk about, because if you haven’t and something goes wrong, you don’t want to start a plan at that moment.
  12. A mention of the available resources to learn about your finances would be good too, like: Financial Basics with Ellen Roseman (very good)..

Any other topics I have missed that folks think should be included in terms of Finances for a Marriage Preparation course?

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Financial Predictions for 2018

My ability to see the future is unreliable, but I am willing to guess about the future. I supply these financial predictions for 2018 as an example, and anyone who uses them to make financial decisions, does it at their own peril.

Financial Predictions


BCM Financial Predictions

  1. Interest rates will continue going up. Inflation is in the air and the economy is starting to overheat. By the end of this year, the overnight rate will be at least 2.5%. This is a 150% increase, so be aware, and lower debt.
  2. The Canadian Dollar will be above 85 cents by the end of 2018. The American economy is going well for now, but the Canadian economy will do better. The Tax relief in the USA will cause their economy to overheat for a while as well (i.e. Inflation).
  3. One of the 3 following bubbles will burst:
    1. Bitcoin, someone will finally point out the Emperor is naked and it will plummet.
    2. Marijuana, the only people making money on this are going to be the Governments (and they will find ways to blow that money).
    3. Property Bubbles, things seem to be cooling down in some areas, but in Ottawa and Montreal things continue to heat up.
  4. The Old Bull in the Stock Market, will continue to rise, for the first half of the year, however one of those bubbles bursting (see 3) will stress things and the markets may end the year at the same levels. Remember to take your profits and rebalance your portfolios.
  5. Maybe not this year, but soon a prominent investing firm will be found out to be a front for an AI trading system, with few human employees. My guess is this is already going on, but the disclosure of this should cause upheaval in the trading world (but it won’t).
  6. The Phoenix pay system will be scrapped, but the new system will work no better. The cancellation will cause a larger Federal Budget deficit.
  7. There will be a bigger data breach than the Equifax catastrophe, that will be disclosed. It most likely happened in 2017.

Official Disclaimer

Please remember, these are SWAG from the BCM (simple wild ass guess from the Big Cajun Man), and you should never use these financial predictions for your financial planning.

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Happy New Year 2018

It has become a tradition that every new year I wish you all a Happy New Year. A Happy Financial New Year is also my wish for you and your loved ones. The New Year will start cold and snowy in Ottawa, so here is my New Year Wish.

All Those Happy New Years

Yes, for about 12 years I have wished you a Happy New Year

  • 2017 I pointed out that you start paying CPP and EI again, so your net pay is going to be lower.
  • 2016 Happy New Year, just didn’t happen, not sure why, must have been having a grinchy holiday?
  • 2015 Happy New Year and I included a really bad joke about it being the year of the RAM in the Chinese Calendar.
  • 2014 Happy New Year again I pointed out that CPP and EI rates were increasing as well, I really am a kill joy.
  • 2013 was a Happy New Year, a celebratory Sunday was the photo to start the year.
  • 2012 I used to post best of Twitter posts, and it seems to have fallen on a Sunday as well.
  • Merry New Year! It All Starts again…  was how 2011 started, and I included a bunch of resolutions in that article.
  • 2010 New Year began with me in a new job, which was very nice, given I had been unemployed for a while.
  • 2009 started a little bleak, in that I was unemployed, and was looking for a job, during a major economic crisis.
  • Belated Happy and Prosperous New Year was how 2008 started, the economy was booming, employment was high, but there were hints of the systemic failure that was coming soon.
  • A New Year Brings Tax Breaks? The tax breaks appeared in 2007 but later disappeared, unfortunately.
  • 2006 I was still figuring out what this whole thing was going to be, but I did show some signs of a ranting good time.

Yes, I really did start in 2005.



New Year’s Resolutions

I have written about financial resolutions and resolutions in general a great deal as well.

 

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Pessimists Make Better Financial Planners

Plan like a pessimist, live like an optimist I have lifted from Doug Hoyes’ book (amazon link) (although I have heard it elsewhere as well), and it is an excellent financial life motivational statement. You can’t live every day assuming the worst is going to happen, you will just make yourself miserable (I can assure you this is the case, from personal experience), however pessimism is the best way to view your financial plan.

If you are a pessimist in your investing and financial plans, you should be able to deal with downturns and the interesting “twists of fate” that we call life. Can you plan for all the things that can go wrong? Absolutely not, however you can take a few careful financial steps to  deal with problems that may arise in your financial life.

Pessimist and Optimist

Words to Plan By

The big one to deal with, is what if you lose your income (after the fallacy of infinite income)? So many possible reasons can cause this, but if tomorrow you had no more income, what happens?

  • Can you afford where you are living? For how long can your emergency funds keep you in your current living arrangement? If you have a mortgage, you can try to sell your house, but if you cannot keep up payments on the mortgage, you may not be able to sell it, before the bank forecloses. If you rent can you keep up rent payments for a period while you are without income?
  • Do you have any insurance to combat this lack of income? If it is caused by a catastrophic health issue, do you have disability insurance? Is it enough to keep you financially afloat? Is it through your employer? If you get sick, would your employer lay you off? Remember some companies self-insure, so if your employer goes under, and you are using their disability, you will end up like the Nortel folks on disability, out  in the
  • If you were laid off, is your résumé up to date and ready to use for job hunting? If not, why not? You should be looking for your new job before your old job disappears (ideally).
  • Dying can cause a large problem. Do you have life insurance? What happens if your insurance company decides you died of a pre-existing condition, and they won’t pay? Does your family even know about the insurance? Do they have cash available in accounts that won’t be frozen (when you die)? Lots of things to think about on this one.
  • What if your spouse dies? Do you rely on their skills to take care of your kids, or do you rely on their income to pay for your lifestyle? Partial loss of income can be as destructive as complete income loss, it just takes longer to ruin your

These are such a small slice of the whole picture. This is where your pessimistic side can come into play. Engage it  on this planning (and not  about all that stuff that keeps you awake at 2 AM in the  morning). Work hard on this plan, but  when it is done, enjoy your life you have planned as best you can to  deal with life.

In about a year (and every year) revisit the plan, and adjust it to reflect life changes as well.

My apologies to Doug Hoyes, a lot of these ideas are lifted from his fine book, which I have “read” (listened to the Audio Book), but these are important issues.

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Happy Financial New Year

Yes, another year has already begun and there is a raft of financial stuff you should be thinking about (right now), for the coming financial new year.

My Personal Opinion On Resolutions

My Personal Opinion On Resolutions

What kind of things? You know my great love for lists, so let’s start the year with one:

  1. You will have more TFSA room, so you should be able to deposit more money into yourTFSA. This year your can add $5500 more to it, and the sooner you put it in, the sooner it has a chance to grow as well.
    • If you are adding new funds to your TFSA and you are using a Couch Potato Index portfolio, or you have specific percentages by sector, now might be a good time to use these extra funds to bring the portfolio back into balance too.
  2. Rebalance your portfolios might be a good idea overall, given the cogitations and undulations of the markets over the past little while, now is the time to “take profits” and “take advantage of good prices” if you will allow me those car salesman-ish type expressions.
  3. Check over your current insurance coverage. You need to know when all your insurance comes due, how much you are paying, whether the rates have gone up and maybe write it all down (just in case). You don’t want to be searching for insurance coverage after a major incident. Now might be the time to start thinking about shopping around for better rates as well (before you are about to renew).
    • An excellent example is if you are turning 50 this year, now is the time to start shopping around for better term insurance rates, and maybe time to start thinking about disability insurance as well.
    • Note there is a handy life insurance quote tool on the right side of this —> give it a whirl.
  4. Expecting a new child this year? Have one and haven’t started their RESP yet? Start now, in the name of Sky Rocketing Tuition rates, start now, or you are dooming your child to a huge student debt load (or you can not give a flying hoot and let them pay for it themselves, take your choice).
  5. It’s RRSP time, how do I know? It’s a trick question, it is always RRSP time (and TFSA time for that matter). Before the insanity of February, go put some money in your RRSP now, and give it a month head start on growth.

How to Start?

How is that financial plan going? Now is the time to have a look at it, and see if you need to change it for this year, or just keep cruising along. It didn’t work for you at all last year? Time to start a new plan, try some new ideas, and see if they work better for you. You don’t have a plan? Excellent time to start a new financial plan (just like RRSP time, financial planning time is right now).

New year, new plan, and let’s get going on this.

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