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This is a guest post from WC, a guy in Chicago that writes about money at The Writer’s Coin.

In May, I will celebrate my two-year anniversary with M, my favorite person in the world. I thought I knew a lot about everything before we got married, but now I’m wiser. So for all the newlyweds out there, or the ones thinking of walking the plank getting married, here are some things you should know.

There is no I. Marriage is all about the “we”. It’s not “your” money or “my” money, it’s “our” money. It isn’t your retirement, it’s our retirement. It’s not an easy concept to grasp, but you’d better adjust because when you get married you really don’t have a choice. The sooner you accept it, the easier it will be. Don’t fight it…As you’ll see, this will become a recurring theme throughout your married life.

There is no “right” way to do things. When M and I got married, I checked my bank and credit card accounts every day. M did not — she just made sure there was always money left in her account at the end of the month. When I showed her my method, she was taken aback, but she saw some use to it.

So we found a middle ground: we sit down and run through our budget midway through the month and at the end. It gives us a checkup halfway through and then at the end we check to make sure we met all our goals. It’s like a challenge and it works for us.

Maybe you use a fancy spreadsheet you run through every month that tells you exactly where your money is going. Or maybe you use Mint to track your spending. Or you might be one of those people that does it all in their head — no paper trail necessary.

Either way, it might be the way you do things, but that doesn’t mean it’ll be the way we do things. You will have to adjust and find a way of doing things that works for both of you.

Saving is saving, no matter how you do it. Being a big fan of I Will Teach You to Be Rich, I used to have sub-accounts with specific names for whatever it was I was saving for. It’s called targeted saving, and I thought it was a great idea.

If something unexpected happens, you take money out of the emergency fund and you still get to make your budget. It’s all a psychological thing to keep you feeling like you’re on track.

I showed M the system and she gave me a look: “What’s the point? It’s all the same amount of money either way.” She was right and I started to question how useful the whole system was. In the end, it didn’t make the cut — we didn’t find it useful enough for the time it took to set up. I thought it was a great idea, but M was right: it’s still the same amount of money. End of discussion.

The important thing is that we were saving, regardless of how we did it.

Falling in love is good for the budget. It’s called economies of shared living, and it means you’ll spend less money when you split the cost with another person.

But you’ll still need to set up a budget that works for the both of you.

I used to use my credit card for everything. It tracked all my spending and gave me some decent rewards. M, on the other hand, liked to have cash in hand. But I wanted to get her to budget, and my system of simply knowing how much you’d already spent (remember by daily checking of accounts?) just wasn’t going to work for her.

But she felt the pressure to find a system that worked for her so we could meet our budget every month. And she did: the envelope system. She took out the money she had allotted for the week and then stopped spending if she ran out of money.

As for me, I still use my credit card like I did before. This was one thing we were able to keep individualized, which is important when you get married (we still have individual accounts outside of our joint account). With all the push to turn I into we, it’s good to have your own things you can do how you want.

The important thing is that you have a budget in the first place.

Cooking together is a great idea. You get to spend time together, it’s good for the budget, it’s healthier, and it creates some equality in an area where traditionally it’s one person doing all the cooking.

In most relationships, one person does all the cooking. Maybe you have an arrangement where the person that doesn’t cook does the dishes to make up for it. That’s fine — but I would recommend trying to spend a fair amount of time in the kitchen with your significant other.

It’ll give you a good environment to work together towards a common goal — making a good meal. Things can get tense in the kitchen, but that’s the whole point — you’ll learn from it and when something more serious than overcooked lasagna happens, you’ll have the tools to handle it.

Plus it’s fun.

Communicate. Marriage isn’t easy, especially when you’re talking about money. But even if none of the other stuff I’ve mentioned clicks with you, then you should at least take one thing with you from this post: communication is key.

You might not track your money or save anything or cook together. But you better communicate or else your marriage is going to be a train wreck.

‘Til death. I’ve been married for just under two years, but I can still remember what it was like to deal with money on my own: You think you have all the answers and you treat everything the way a dictator would. You’re never wrong and everyone else sucks.

Marriage has introduced democracy into my decision making and I’m grateful for it. It’s made me smarter, wiser, and less of a jerk.

—
Related Articles at Get Rich Slowly:

• Survey: Money and Marriage
• Daily Links: Money and Relationships
• links for 2006-09-19
• Money and Marriage: Tackle Trouble BEFORE It Begins
• 7 Tips for Money and Marriage

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Foreign exchange has been a hot topic lately with the weakness of the US Dollar and has always been an area rife with scams and rip-off artists (even the SEC warns about it on their website for forex transactions). Trading in foreign currencies works off the same principles are trading anything else, you want to buy low and sell high. Scammers would like you to believe FOREX is magic, that there are sure-fire trading systems that work 100% of the time, but Forex isn’t magic and there are no sure-fire trading systems… it’s just another way to invest.

So for years, the Foreign exchange market has been a secret and somewhat of a mystery to many traders, including myself. If you thought about investing, you mostly looked to the stock market or to bonds as places to invest. If you were like me, you knew about people trading in currency on the foreign exchange market but you never knew much more about it.

While I’m not advocating anyone jump into Forex investing today, I think there’s value in understanding how it works, even if you never plan on investing in it. To help demystify the Forex market, I thought I’d write a Foundation article about the basics of FOREX.

What is FOREX?

Forex is the shorthand name for the foreign exchange or currency market. The Forex market is the largest capital market in the world with an estimated 2-3 trillion dollars changing hands every single day.

So where is the Forex market? It’s kind of everywhere people exchange currency and there is no central clearinghouse, unlike stocks and options. Stocks that trade on the New York Stock Exchange are bought and sold in New York. Many futures and options are traded on the Chicago Board of Ttade in Chicago. With forex, it’s everywhere.

Another interesting distinction is that forex is traded twenty four hours a day from 20:15 UTC on Sunday until 22:00 UTC on Friday. The NYSE trading hours are only from 9:30 AM ET until 4 PM ET, with some pre-market and after-hours trading.

Also, unlike other markets where everyone is presumably on the same footing, there are different levels of access in the forex market. At the very top are commercial banks and securities dealers in the “inter-bank market,” which accounts for about 53% of all transactions. That’s where bid and ask prices vary by only a pip or two (more on that later). Below that level are the smaller banks, then multi-national corporations, hedge funds, and then retail investor/speculators. As you move down the hierarchy, the bid and ask spreads on transactions widens (which is where market makers earn a profit).

How does a trade work?

First, currencies are quoted in pairs. The majority of currencies are traded against the US Dollar. The Eur.Usd (Euro/US Dollar), Gbp.Usd (Pound/US Dollar), Usd.Chf (US Dollar/Swiss Franc) and the Usd.Jpy (US Dolar/Japanese Yen) are considered the “majors” and are the most actively traded currencies. Trading in the majors equates to approximately 80% of all volume transacted in the Forex market.

Let’s take the Eur.Usd pair as our example. We are buying the first currency using the second, so we’re buying Euros with Dollars. We do this if we believe that the Euro will increase in value versus the US Dollar. In other words, we are taking a long position in Euros at the current market price and expecting to close our position at a higher price at a later time in the future.

Also, there are no restrictions in short selling because. If you think that a currency will lose value, you can take a short position and sell that currency immediately. Regardless of which direction the market is moving you will be able to make the appropriate decision that fits your trading plan.

Forex Commissions & Fees

The interesting thing about the Forex market is that brokers are compensated through the difference in bid and ask prices. When you go to sell a currency pair, you sell it at the bid price. If you go to buy a currency pair, you buy it at the ask price. The more liquid the pair, the lower the spread and the lower the commission.

You don’t pay a per transaction commission in the traditional sense, the commission is built right into the bid/ask spread. The transaction fee can be very high for the small time investor because spreads can be very wide on some of the more illiquid pairs. Whereas TradeKing always charges you a flat $4.95 a trade, you have to pay careful attention to spreads when making forex trades because the price, percentage-wise, can vary greatly.

In addition to the transaction fees, there are all the other fees common associated with any broker. Review to see what the minimum balance requirements are, if there are inactivity fees, fund transfer fees and the like.

So Why Forex?

If it sounds like forex is mostly for speculators, you’re not far off. Forex isn’t for the buy and hold investor because every site I read touted features of the forex market that appealed to speculators. The 24 hour nature of the market, the massive liquidity, speed of trade executions, and the number one reason forex is so popular – leverage.

Many brokers enable their clients to trade over 200-1 leverage. This allows you to increase your position size exponentially. You can increase your over all return while tying up less capital. This is like trading stocks on margin and increases your risk exponentially.

If you are utilizing 200-1 leverage, starting with $2000 in margin would allow you to control upwards of $400,000 in currency! With stocks, you’re usually only talking leverage around 2-1, not 200-1.

For all the scams and rip-off artists claiming you can become very very rich in a short period of time, you can also become very very poor just as quickly. With leverage, gains are magnified… but so are losses.

Picking a FOREX Broker

If this sounds like the game for you, because it’s a game for speculators, you will want to find a reputable broker.

Most brokers offer paper accounts, letting you paper or demo trade for a month or so. This lets you familiarize yourself with their software package, how the market works, and let’s you lose fake money without real penalty. You can take a test drive of their charting packages and analysis services, just to get a feel for it.

Here’s something important though, you have to figure out how they execute trades. Brokers will do one of two things when they take your currency transaction:

• they will either use a dealing desk,
• or no-dealing desk model of execution.

A dealing desk firm will offset your transactions internally. In other words, when you place an order, your broker will be the direct counter party for your trade. You will buy or sell directly to your broker, which means you probably aren’t getting the best price. When executing your trades, a dealing desk is taking an open market position which immediately creates a conflict of interest against you.

A no-dealing desk broker will pass your order through directly to an interbank counter party. This means that your orders are anonymous and your broker does not take an active interest against your positions. When deciding on a broker, be sure to ask these types of questions. Good brokers will be happy to explain their dealing methods and inform you of any other restrictions they may have.

My Conclusion

I can see why forex trading can be very exciting and why there are so many “get rich quick” schemes. When you can leverage 200-1, you can earn a lot of money very quickly (and lose it just as quickly). With 24 hour trading, it’s a lot like gambling in the casino… the lights are always on and the clocks are always off. I’m fairly certain forex trading isn’t for me but it was fun reading about it.

Do you have any experience in Forex trading? Words of warning or advice?

(Photo: matze_ott)

Introduction to FOREX Investing from personal finance blog Bargaineering.com.

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