Getting Married? 6 Financial Discussions to Have With Your Partner
Between popping the question and saying “I do,” you and your partner have plenty to plan. And while it’s not as fun as cake tasting, you’ll want to sit down together and discuss the expectations you have about your future finances. According to a survey offered by Psychology Today, 27 percent of respondents found money to be the biggest stressor in their marriage.1
Having hard, truthful discussions about money beforehand can help lay the foundation for an honest and open financial relationship later down the line. As you prepare to tie the knot, take these six financial considerations into account first.
Discussion #1: Your Financial Influences
At this point, you’re likely familiar with what your partner’s childhood was like. But one aspect of their past you may have yet to discuss? How finances were handled in their household.
Were their parents frugal, coupon-clipping savers? Or maybe they splurged on dinners out and shopping trips every weekend? Now’s the time to dig deep into how your partner’s parents may have shaped the way they think about money. With all expectations out on the table, you can begin from the ground up determining together how your future family will be handling your finances.
Discussion #2: Discuss Your Financial Triggers
Some people are stress-spenders, others spend when they’re bored. Many splurge when they feel social pressure to do so. Whatever it is that causes you to go over budget, it’s important to identify it and make your partner aware. Having your spouse as an accountability partner can really help both of you stay aware and on top of the poor spending habits either of you may have.
Discussion #3: Determine Joint or Separate Savings
One of the biggest financial decisions to make together is determining whether or not to combine your finances into a joint account, or keeping things separate. For example, if you both earn an income, you may decide to keep things separate in order to reserve your own discretionary income. On the other hand, you could find it useful to funnel a certain amount of your earnings into a joint account dedicated to paying off monthly bills like internet, a mortgage, car payments, etc.
If you do choose to combine your finances, this will make it even more critical to sit down and discuss your spending/saving strategies with one another.
Discussion #4: Decide Who Does What
Does one of you cook and the other cleans? Maybe somebody makes the bed and the other takes out the trash. Just as you’ve developed a chore system between the two of you, you’ll want to determine who plays what financial role. If one of you is more interested in the market, they could decide to take the lead on your portfolios. If one of you is more organized than the other, they could be in charge of paying the monthly bills. Either way, you’ll want to sit down and draw out a list of any and all financial tasks before determining who should do what moving forward.
Discussion #5: Special Considerations if a Second Marriage
First time marriages can have their financial challenges as we know from #'s 1 through #4. Add in a second (or third) marriage to the mix and things can get pretty complicated pretty fast. It's important to factor in wishes pertaining to children from previous marriages as well as possible asset protection strategies such as a prenup or postnup. These documents can help clarify who gets what in the event of a divorce.
As difficult as it may be to have these conversations before you tie the knot, having an agreed upon plan in place ahead of time can alleviate some stress down the road.
Discussion #6: Having a Financial Plan
This can be one of the best wedding gifts you can give yourself. By having a good comprehensive financial plan in place, you will be ahead of the majority of newlyweds. "Winging it" is not an option.
Since money issues is one of the leading causes of a breakdown in a marriage, it is well worth the time spent to have a plan that you both agree on to mitigate any issues that arise later.
As always, please feel free to reach out to me anytime for a conversation. Click HERE
In good health.
All the best.
Rick Fingerman, CFP®
*This blog article is meant to be just a simple primer. I'm happy to speak in more detail one on one.
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