Protecting Family Ties from Financial Woes

How to Protect your Families from Debts.

Happy Spouse, Happy House Series: Did you know that 1 in 8 couples separate or divorce because of money?

A wise man once said: “The love of money is the root of evil” (Paul of Tarsus). Another public leader added to this wise saying: “The LACK of money is the root of evil.” Both sayings are true. The love of money can influence people to make drastic decisions – slavery, robbery, etc. However, the lack of money can influence a person to take the same actions.

Debt plagues families today. Child support debt is one of the main issue that continues to arise in the courtroom post-divorce.

Student loans is one of the debts that tear couples apart. More than one-third of borrowers said college loans and other money woes contributed to their divorce, according to a recent report from Student Loan Hero, a website for managing education debt.

In a household, outstanding student loan debt is currently $34,144 which is more than 60% rise from the past 10 years.

How does student loan debt affect families?

Student loan debts put a strain on love relationship. For couples who are just starting out, it affects their decision to purchase a house or have children. For couples who are already married, it makes it challenging (with loans combined) to fully repay the loans. Dave Ramsey, among other finance educator, teaches couples how to pay off student loans and take control of your money.

Tips for protecting your family ties from financial woes.

1. Make major financial decision together. Couples can set an amount that constitute “Major” decision. A husband and wife can agree that any purchase greater than $200 is major. They can talk about the importance of the purchase prior to making the purchases. Buying a home, adoption, or sizable charitable gift are major decision. Sometimes, purchasing a cup of coffee can be a major decision – IF you’re buying $5 cup of coffee everyday. This little amount here and there will add up to a sizable amount.
2. Save 10% of what you earn. It seems simple, but it is effective and helpful. One of the best books I recommend is ‘The Richest Man in Babylon.” As your savings grow, despite your debt, it boosts confidence and encourage couples to meet their financial goals. If you eat with your ten fingers, you will remain in debt. This is a proven statement – ask “celebrities” who have filed for bankruptcy (not as a financial incentive).
3. Create Financial Goals. If the blind is leading the blind, they will both end up in a ditch. It does not matter which one of the partners is good at finance. If the wife is better at accounting, BOTH should list what they want to achieve and the wife can account for their spending. Create a monthly report and do not be afraid to talk about money. You work hard to earn the money. Even if you are a stay-at-home mom or dad, your presence in the house allows the other partner to work and earn income. Also, you are creating a greater investment – your children. Talk about money while dating. Become more comfortable talking about money while you are married. It is healthy for your family.
4. Stay away from attaching emotions to money. Protect what you earn. However, guard it gently because it can easily blind a person from making sound decision. There is a proverb that says: “Do not make a permanent decision from a temporary situation.” If you must make a decision that requires a financial dent, such as going back to school on student loan, getting a private loan for a business start up, or putting a chunk of your savings in an investment/hedge fund, then take your time. Do your research and look for alternatives. Perhaps there are scholarships, federal grants, angel investors, and family members you can ask for financial help. Couples, do not shy away from living with parents at the start of marriage. Take a free class on Personal Finance or Financial Management. It is just as important as Marriage counseling.
5. Communicate – No secrets. A major reason couple get a divorce is because of a partner’s infidelity. There is financial infidelity as well. When one partner makes secret purchases, mismanages the savings/moneys, or fails to communicate with the other partner, it creates distrust. The bridge of trust slows cracks and crumbles. It is vital and healthy for couples to talk about their desires and interests – especially if it will require making a purchase. Tell your husband about that $500 red shoe you saw in the mall. Tell your wife about the $1200 suit that you can’t get off of your mind. It sounds silly, but talking about it keeps it in the open. If the other partner has gambling issue, get help.

These are few tips to help families protect their finances. This is for informational purposes and not a professional advice. Talk to a tax advisor or finance counselor about your specific situation. The goal is to be debt free and protect your family. It is possible.