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Mr. Hubs proposed to me December 23 and was so excited to start our life moving forward together that he told me that he wanted to be married sooner than later. As a result, we were married less than thirty days later on January 17 in a small ceremony at the home we were currently renting. Mr. Hubs don’t eff around.
We had been together for over 3.5 years when we got married, but had never discussed money. So we sat down to have a very frank conversation about our assets. All couples should have an asset discussion as soon as possible if you marry or have decided you will be together for the long haul. Money is the leading cause of stress in relationships, and miscommunication about it only makes it worse. Honesty is the best policy when it comes to money, with no exceptions.
For that matter, even if you are not in a relationship or money is a factor, you should have an asset discussion with yourself. A lot of people lie to themselves about money – and this includes ignoring it like an ostrich with its head in the sand. If you cannot be honest about the state of your finances, you will never be successful financially. As with all things in life, I’m sure there are exceptions to this rule, but for 99% of us, I would assert that this holds true.
In order to give us time to prepare for our discussion, I gave Mr. Hubs and myself a week’s notice to gather information together, at which point we sat down at my computer and plugged the numbers into a joint spreadsheet. I recently had a conversation with coworkers about evaluating net worth and was told, “I would have no idea how to do that.” So, accordingly, I will not only TELL you, but I will also make my template available for download for free below if you want an example or decide you’d like to use the template yourself. (I love Excel. Excel 4 lyfe.)
To get a grasp on your finances, it is necessary to evaluate honestly what your total debts are and what your total assets are to get a quick, sometimes rough, picture of your net worth. Pretending a problem does not exist will only hurt you in the long run. When doing your evaluation, whether with someone else or by yourself, you should look at the following:
Start with your FICO and your income
If you don’t know your credit score, also known as the FICO score, pay $19.95 (at the time of writing) to obtain it from one of credit bureaus via MyFico, or, at the very least, get your free annual credit report. You can also use free apps like CreditKarma to get an idea of where your score is. FICO scores determine quite a lot – from your ability to procure loans to even impacting your qualifications for a job position and more. Having a good score or a bad score can mean the difference between hundreds of thousands of dollars over the course of your life (not an exaggeration) depending on the interest rates you qualify for, so they’re no joke – not to mention that the score also impacts your spouse once you are joined legally in the eyes of the government, which is another reason it is imperative to know precisely what your status is and be open about it.
I also kind of feel that this goes without saying, but make sure you have a good grasp on (a) exactly what you make each year in terms of income, and (b) what your take-home pay is. This goes a long way toward budgeting and is something you should know, as well as your partner.
Determine your assets
Assets are the positive numbers (above zero) that you have tied to your name. These include (but are not limited to):
- Cash
- Savings accounts
- Investments (this can include CDs/bonds that you were given by an aunt when you were a baby. No? Just me? Okay then!)
- Retirement accounts (such as a 401K, Roth IRA, or TSP account)
- Checking balances
- Large property assets that you own (i.e. do not own money on, such as a paid-off car)
Look at your full banking statements. If you have a retirement account, take the time to look at your quarterly statement or log into your portal and pull the numbers. Verify interest rates associated with your savings accounts. If you own your car, use Kelley Blue Book to find out what it is worth if you traded it in and list it as an asset. You get the idea.
How much debt do I have?
Remember the part above where I said you need to be honest with yourself? Even if it hurts? Here’s where that comes into play. If you have any kind of debt, put it in the list, no matter how embarrassed or ashamed you may feel of it. This includes:
- Student loans
- Car loans
- Credit card debts
- Personal loans
- Medical loans
- Really anything with a negative dollar amount tied to your name
I won’t lie to you. This debt review is going to be tough. It was difficult for me, and compared to many people in my generation, I don’t have extreme debt – I would say I have a standard amount. Regardless, it was horrifying to me to look at my life reduced to numbers on paper and see that I only had a net worth of a little over $1,000 (true story, my personal numbers are the ones I’m showing you in the spreadsheet below; going for total transparency here), and that was only if I sold my car and cashed in my retirement account.
This requires that you go into your loans or pull mailed bills if you are not paperless, double-check your credit cards, and verify your interest rates. It may take a little bit of time, but it will give you your exact status and you’ll be up-to-date on your numbers.
Date Assessed
Include the date assessed for whatever you are using to track this information. It is my personal opinion that you should conduct this self-assessment twice a year, or – at the very minimum – at least once a year. If you want to stay on top of your finances, and keep yourself encouraged, looking at the big picture view to see the asset column (hopefully) growing is an amazing morale booster. It also identifies any areas that you might need to pay closer attention to or address in some way.
Template
Not sure where to start? Want a spreadsheet that will quickly calculate for you and show you a cute little pie chart? Feel free to download the template below. Simply follow the comments if you need help, or feel free to leave a comment asking for clarification. Please note that I’m not an expert at Excel – I just really love it.
Using these numbers, you can have an open discussion with yourself and/or someone else about what your net worth is and where you want to go from there. This review becomes a starting point for your goals, budgeting accurately, and, if you have any financial trouble zones, an identification of where they are and how you can begin addressing them. If you are newly married, like Mr. Hubs and I were, this discussion also becomes a basis for how you want to build your financial lives together.