In most case, divorce is painful and very emotional for the people who experience it, as well as those close to them. But what most people are not aware of is that divorce is very likely to be one of the most damaging financial steps any couple can take.

My wife and I are not in danger, thank God we love each other so much. But we see many people getting divorce here and there. It’s like seeing a domino effect.

Anyways, what I know about them is that most of the crisis they went through involves money conflict. A divorce may be caused by unfaithfulness, but the ongoing problem that never seem to go away, hey you guess right, it’s all about money, and money, and money.

Here are John and Shelley, an couple that does the seemingly simple –but-can-be-a-problem-someday—kind of mistake many of us do: not talking about money before getting married. Young, both had jobs, spent most of their incomings, got married, and joined finances like most people do.

After a while, John became aware of his wife was a shopaholic, a compulsive spender. To make it worse, their lifestyle changed into worse financial management so that they had to live paycheck-to-paycheck and not having anything to save.

Then they had two children. Finances, or simply money, continued to be a stinging spot — they fought about them often. They never seemed to have enough money to get ahead. John then found in the bedroom closet Shelley’s wardrobe: dozens of expensive dresses, many still with the tags. He then found out there were many more Shelley hadn’t even carried into the house.
Gradually, John and Shelley fell into debt. Mortgage problem. To teach Shelley a lesson, John gave her the checkbook and asked her to pay the bills. It didn’t work, of course. Their financial crisis speeded up. Their house went into foreclosure. Finally, they lost their home. They finally filed a divorce.

Four money talks

For those of you who are going through similar financial ruins, one thing is certain: Until you deal bravely with your financial issues, you’re going to continue to forever be in problems. But the real time to address these issues is before you tie the knot, not ten years into the marriage.

Ron Lieber’s lists four financial issues that must be discussed before marriage:

1. Ancestry. How did your parent deal with money? What did they teach you about handling it? How your family manage money plays a great role in your own way to manage money.
2. Credit. Some experts recommend that couples who plan to get married pull their credit reports (and scores) together and discuss the results. You can even do it on your fifth date! Not romantic, but necessary to see how you can manage financial stuff together.
3. Control. Before getting married, both of you should decide who is responsible for which portion of the household accounts. Settle on the family financial structure. Know your budget, and how much each of you is allowed to spend freely.
4. Affluence. Most vitally, discuss and plan your financial goals. How prosperous do the two of you want to be? What are you willing to sacrifice to get there? I know a couple who lived like paupers for five years so that they could pay off all of their student loans and set up a solid financial base for the future. They worked together to reach their shared financial goal.

Obviously, disagreements over finance do happen in marriage, regardless how cooperative couples are. But what I know for sure, couples who always know they have to sacrifice something to reach their shared dream will not let disagreement lead them to divorce.

Before reading the article, it is recommended that you read the Part 1 about the benefits of spending less than you earn and Part 2 about How to spend less than you earn

So here is a guide on how to increase your income:

• Stop wasting your time. Especially at work. The terms “time is money” is true; but you can get more than that. There are many things you can do rather than just wasting your time. Just checkout the list under, and you’ll see why you really shouldn’t waste your time.
• Improve the transferable skills (skills that can be used in almost any career path). One of the popular transferable skills is public speaking. If there’s any opportunities to do so, then do it and speak your mind in front of public. Another example is the time management; and you can learn to build an effective time management scheme such as organizing and filing your paperwork, Brainstorming ideas, etc. Other examples of transferable skills are setting the standard procedures of your work, take charge of a work project etc. All of these things push you towards developing skills that are genuinely useful no matter where you’re heading in life.
• build a strong network and relationship with many people as you can, and try to give a bigger portion to the relationships in your field. This can be done by simply sending emails to people you’ve interacted and keep up with what they’re doing. If you have an opportunity to connect people that can help each other, do it immediately, without hesitation. Share what you know and be valuable to others.
• Start a side business. Turn a passion you have into money. Don’t know what that could possibly be? Think about it carefully and I might post interesting ideas to start a side business for you
• Finally, stand out at work. Speak up at meetings. Show empathy for the problems that others have. Take on only projects you can handle, but do them well. Get to know the support staff – and treat them well. Don’t burn bridges when you move on – make an extra effort to maintain good relationships when you leave. These little things add up to a huge difference.

Keep that rule in mind: spend less than you earn. Each move you make to maximize the gap between what you earn and what you spend will put you in a better place in your life.

Like this article? State your ideas or questions below. Any ideas much appreciated.

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Before reading this part, please do visit my previous post that talked about the benefits of spending less than you earn

So now we are going to talk about how to actually spend less than you earn. And here are some tips/guides on how to do it:

• Check your monthly required bill. Do you really need this stuff? Can you replace this service by doing something that will bring you more health? Ask yourself these kind of questions for things related to your cell phone, premium cable, or unlimited text message.
• Diligently, keep tracking your spending. The simple process of writing this down every expense will make you think twice about the unnecessary ones. At the end of the month, take a careful look at them and ask the same question: do I really need these? Do these really contribute to the value of my life?
• Carefully look at your routines. Are there things in your routines that cost money? Trimming $1 from your daily spending saves you $365 a year.
  Switch to a bank that respects you. No interest at all on their checking accounts. Tons of fees for ATM use. Draconian overdraft policies. A tiny interest rate on savings accounts. Monthly usage fees of all kinds. All of these things are a waste of money.
• Go green! Going green can be a solution to cut your spending and increase your money!

So now we move on to the next level: how to increase your income

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If you’ve read many rules about finance, then you should come to the same basic rule as this one:

Spend less than you earn.

Yes, ladies and gentlemen, it is that simple. But why are there so many people who are buried in debt or simply living from paycheck to paycheck?
There are several benefits you gain by spending less than you earn.

• You start treading on the path to omitting your debts. By spending less than you earn, you have enough money to pay your debts. The debts decease to exist, cutting down your monthly bills and frees you from worries!
• You begin to save. Now you have enough money to save. It will save (literally) you in times of emergencies (like job loss), and give you room to enjoy having the control to your future and old age.
• You are happier. With fewer debts, emergencies covered, retirement planned, there’s much less to worry about. Like old saying: no worries, no disease. Okay I made that up. It’s true though. It will make you happier for sure.
• Now you have opened wider possibilities that were closed to you. Now you can choose to move on to other things you like to do for living, or maybe chase your dreams! You have more freedom. Doesn’t that sound good?

So our next stop is: How do you actually can spend less than you earned

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It is time for another family finance guides, guys If there’s a new family member in your house, you can bet that in his/her three year’s anniversary your beloved son/daughter will gather quite a few dollar bills from other family members or relatives for events like anniversary or Christmas.

Some of us chose to allow our kids to spend the money immediately for some low-cost toys/food such as hot wheels or something. It’s a simple lesson we teach to our son that money is something that can be exchange for goods and services.

Although I do agree with that statement, I prefer to teach my son/daughter on how to save some of them. Why? Because he once asked for a more expensive toy and if he keeps spending the money the way he is now, he won’t be able to buy the toy with his own money…

Here’s an easy example: You take your son (with 2 dollars with him) to the store, and instead of wanting a 2 dollar toy, he prefer the $7.99 toy.

So here’s how I will deal with it:

I will tell him: “the toy costs eight dollars. You only have two dollars. You don’t have enough dollars to buy that toy.” We will work through the counting using our fingers so that he understood that he needed six more dollars.

That won’t shake his interest in the toy, however. I bet that he still wants it.

Then explain to your child that if he/she doesn’t spend the dollars he has today, we can take them home and then we wait for another 6 dollars and then we buy the toy. It will take some more explanations, but do not give up yet

In your home, prepare a jar lid to store your beloved son/daughter’s money. Transparent jar lid would be better Hopefully, your son has been able to add some money to the jar – he can clearly see his savings as it builds up. He knows what it’s for and he’s excited to contribute to it whenever he can.

To put it simply, saving money has now become relevant and exciting for him. It’s very tangible – he can see his savings grow. He also has a goal that’s small enough that it seems reachable – he only needs to save up to $8, after all.

So what’s next? The near future points us to our child’s next lesson: how do you earn money? That will be a whole new adventure.

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It is common for us to spend some time reviewing our personal finance situation once a month. We usually get our current balances on all our debts and assets examined and included carefully and then we do other bunch of things to measure and determine our financial standing in this world.
We usually call the difference between my assets and my debts at the end of the month as our net worth, but guess what? That is NOT our net worth really is…

For many people, net worth simple definition is the sum of one’s assets minus one’s debts is a good financial indicator, but it’s far from what I would call “net worth.”

As I take a look down my list of assets, I see things like our home, our savings and checking account balances, our retirement accounts, and so on.
But are those really all of our assets?

I view our close family and friends as major assets. These people help lift us up through thick and thin. They provide great friendship and social situations when times are good, and are there for encouragement (and more tangible help) when times are bad. Certainly, they’re an asset in our lives.
I look at our health as an asset. We’re all in good health. My wife and I are able to earn money because of our good health.

There are many other things in my life that are assets, too, that don’t show up on a balance sheet: our extended social network, the body of knowledge and education that my wife and I can draw on, our talents – these are all assets that can’t be truly quantified, but they all contribute significant value to our lives.

The same type of thinking continues as I move down to the debt part of the balance sheet.

I’m indebted to a lot of people for things they’ve helped me with in life. If called, I would gladly help any of those people with virtually anything they asked for.

I feel a great deal of spiritual indebtedness to the people and things in the world around me. I feel as though it is my responsibility to do what I can to make the world a better place.

I owe quite a bit of time to various groups and responsibilities – and, as you know, time is money.

To put it simply, my real net worth is more than just a sum of financial assets and debts. Compared to the wholeness and beauty of life, one’s financial net worth is just the beginning.

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Lately I have seen many personal finance advisors are saying that it is better to get our retirement saving rather than children college education saving. And here’s why:

There are no scholarships or student loans for retirement. Moreover, if our child does have to get debts for college, they’ll have many, many years to earn their way out of it, whereas when the children go off to college, you won’t have too many years to keep saving for retirement.
On paper, the argument does make a lot of sense. On paper.

This equation leaves out an enormous human element. For many people – myself included – retirement isn’t the big ultimate goal. I might like to think about retiring a bit early, but my big motivation in life isn’t related to retirement at all.

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