Once you get the business of life organized, you take the onus off tax time. You may feel added pressure if you need to pay Uncle Sam but tallying those deduction totals shouldn’t be the heart-stopper it has been in the past. All bets are off, however, if you’ve organized with your heart rather than your head for the past year. Tina Turner was right: what’s love got to do with it? Let’s take a look. See if you find yourself in these scenarios.
1. OK. You pay the bills.
I organized a couple who had turned bill-paying over to the husband right after the wedding. The problem was the husband was a money-drunk who couldn’t manage funds to save himself. About five years into the marriage, creditors began to call and the wife examined their finances. The cat was out of the bag. A mutual decision was made that she should in fact assume bill paying and general business file keeping.
It took a few years to clean up a mess that could have been avoided with one honest chat and no assumptions. It isn’t your sex that determines your fiscal acumen. Have an open conversation when it comes to financial matters. This is one area where assumptions can really bite you in the rear. And even if you aren't the 'financially literate' one who is going to handle the day-to-day, do get involved and understand how it all works. People get sick or die without warning and you don't want to be left in the dark.
You can find articles of mine archived here that deal with the basics of creating a file system. You can also check out One Year to an Organized Life for a detailed primer on setting up basic household files. We all seek control in life. A Cracker Jack file system will make you feel powerful, save you time, energy and money. It’s worth the investment it takes to do the initial set up.
2. Budget? I keep everything in my head.
I used to have a razor-sharp photographic memory. Life takes the edge off that gift, so get into the habit of committing things to paper. One day you’ll be grateful you have this skill in place. You may indeed know off the top of your head how much your mortgage payment/rent is or what the average utility bill is for your home. I’m equally sure you can rattle off medical and home insurance premium policy premiums and your car payment. It’s the little every day cash expenses that do most of us in.
Sit down as a couple, and see in black and white exactly where your money goes. A budget isn’t a straitjacket. It should be a fluid document that gets a tweak every six months to a year as you achieve short-term goals. You don’t want to be the one in the relationship who is always picking up the financial slack because your partner assumes he knows where every penny goes. It may not be good intentions that pave the road to hell; it may very well be paved with assumptions. I’ve got detailed budget creation information in One Year to an Organized Financial Life. I wrote it with financial planner Russell Wild and he provides a wealth of solid fiscal information throughout the book.
3. FICO? I’m not familiar with that term. Is it important?
It may not feel very romantic to ask your future partner about his or her FICO score but it’s best to know before you sign on the dotted line. Your FICO score determines the interest you will pay on big-ticket items like cars, homes and big screen TV’s. It’s a great indicator of how responsible someone is with money and you want that in a partner. Have a systemized way to pay bills in order to help you build that FICO score. If you elect to have automatic payments for recurring bills like car payments or the mortgage, you must remember to deduct them in your checkbook. Have a realistic picture of your financial health. It may not be sexy but it is powerful. Assumptions will get you into trouble in this arena if you don’t check your monthly statements. Computers and human beings make mistakes. You want to catch them before your bank balance is a fictional number.
4. Emergency fund?! I use the ‘wing and a prayer’ system.
Rainy days come when we least expect them. It’s good to have an umbrella stashed where we can easily get it, right? Well, in the world of financial emergencies, your umbrella is three to six months living expenses in a special account. Before you decide to get pregnant, for example, or buy a home, be sure this sum is literally in the bank. It can take a bit of financial organizing to get this amount together, but Russ and I have lots of tips in our book to help guide you.Here are a few examples to stoke your creativity:
Could you engage your neighbors in an old-fashioned garage sale? Depending on the quality of your items you might just have the money you need at the end of the day.
If like me you aren’t a garage sale person, a few useful clicks at Craigslist or eBay might just off-load your ‘trash’ into someone else’s home as new ‘treasures.’
What about consignment shops? You’ll have space in your home and the promise of cash to come.
There is a world of possibilities and being organized will help you narrow your quest to the choices that are right for you.
What’s love got to do with it?
Teasing aside, creating a successful partnership does of course require love. But it also requires respect and responsibility. Romance, candy, flowers and cards are fuel to the love fire. But stoking the embers for long-term heat can best be done by utilizing a few organizing techniques that will keep a roof over your head, a car in the garage, provide college educations for your children and just maybe that trip to Bali.
How healthy and well organized is your financial partnership this April?