Birthday parties, unexpected visits from friends, and holiday bonuses are all great surprises. Finding out your spouse-to-be has tens of thousands of dollars of credit card debt is not such a great surprise. Their personality, values, and favorite color seem like essential things to learn about your significant other before marrying. Learning about their financial condition and philosophy is equally important.
I recently presented a webinar on facing those fears and having “the talk” (No, not that one.) with your intended. Here’s a link to the webinar, Managing Money as a Couple: Thinking About Marriage, in case you missed it.
Historically, marriage was less of a love story and more of a merger. These days, of course, people tend to marry for love, not to strengthen family alliances or to ensure royal successions. We’ve moved away from the merger motive, and many Americans find it difficult to talk about money, especially with their spouses-to-be.
However, it is as true as ever that marriage is an economic undertaking as well as your most important personal relationship. You will live your personal and your financial lives together. Recognizing that early on and prioritizing financial discussions and agreements can help you avoid painful misunderstandings and insufficient funds.
It seems obvious that a married couple should care for one another and have shared values. It may be less obvious that they should have compatible financial values as well. If one spouse is a bargain hunter and the other is a spendthrift, there could be conflicts. That’s why communication is key. It’s important to discuss both the long-term and day-to-day aspects of your financial life.
You will promise to love, honor, and cherish each other. As a married couple, you also promise to support each other through good and not so good times. Since it’s almost certain that you will contend with stressors in your careers and finances as well as in your health and family life, having a clear view of your financial picture and a mutual understanding of your priorities can make the rough times smoother.
What questions should I discuss with my spouse-to-be before marriage?
- How much do we each earn?
- Especially if one of us earns much more than the other, how will we manage our contributions to cover our shared expenses?
These are simple enough questions, but we’re often shy about discussing them.
- How much debt do we each have?
- Are we paying off student or car loans?
- Do we have credit card debt?
- If we have credit card debt, what are our plans for paying it off quickly? [Carrying credit card debt is a major financial risk factor. It is wise to avoid except in emergencies.]
- Do we want children?
- If so, how many?
- Will one of us stay home with them? Who will it be?
- Do we plan to enroll them in public or private school?
- Will we pay for college?
- How large a house do we want?
- Mansion, cottage, or something in between?
- Where will we live? Is the area pricey?
- Are we more interested in status or pure functionality?
- What is our ideal lifestyle?
- Do we prefer country club memberships or camping in the woods?
- Are we happy with an older car or would we prefer a new one every three years?
- What are our big goals?
- Does either of us want to own our own business?
- Start a non-profit?
- Retire early to travel or be with family?
It is also valuable to explore the practical side of financial decision-making and management. Does one of you enjoy paying bills or managing your investments, and the other dislike it intensely? That’s important, too. When someone likes performing a task, they will do it regularly. When it comes to paying the electric bill, consistency is a good thing, unless you like melted ice cream and reading by candlelight.
Also, how knowledgeable are you and your spouse about financial matters? If you both lack knowledge or experience, it may be smart to take classes or spend time reading or watching webinars about financial planning. Or you can contact us directly.
Finally, even if one of you takes full charge of your finances, it’s vital for you both to understand them – your financial situation has a major influence on your quality of life.
These discussions can help get you both thinking about financial issues. Of course, talking about money is not a forcefield that protects you from inflation, poor investment returns, or spending disagreements, but it can help you build a solid foundation for your financial future together.