There is A LOT that goes into planning a marriage… It’s about so much more than just the wedding day itself. Having just gotten married almost a year ago, I’m all too familiar with the many pieces of the puzzle – and the emotions these can bring to the surface, both positive and negative.
Money can be a highly emotive topic at the best of times. But how can you make sure the subject of your marital finances is handled with respect and consideration as you prepare to entwine your lives both legally and financially?
Whether this is your first marriage or fifth, it’s important to get on the same financial page. Money stress is one of the leading causes of marital discord for newlyweds, but having a fiscal discussion, or better yet, a plan, can help you avoid that.
Communication is Key to Successful Couples Finance
Before you say I do, talking about your individual money beliefs and goals is a crucial step in successfully planning your marital finances. You don’t want to wake up 6 months down the road and realise you are not on the same page when it comes to money.
I see so many couples avoid this difficult conversation, especially if you struggle with money shame. But if this is someone you love and trust, you should be able to find the courage to talk about this very important issue.
Set the ground rules to speak in love to each other and do it in a calm setting. Even as a financial planner, I can sometimes find it hard to talk about. But if clear boundaries have been put in place, that gives you a healthy foundation to build upon.
Get on the Same Financial Page
If you don’t agree on the same goals, you will always find something to argue about, and resentment will be the outcome. Do you want to buy a home, have children, travel? Do you want to change jobs or careers? Are you entering the marriage with a significant amount of debt or living paycheck to paycheck?
You should talk about your combined goals for your future and any short-term plans to make sure you are each working toward those goals. If you struggle to agree on what those goals are, it may be a good idea to employ a professional for assistance. Sometimes, a neutral third party can help navigate those feelings.
Do not assume your partner feels the same way about money you do. Almost certainly, they won’t. We all have money scripts we learned as children that we may not even realize we have. A great book to uncover them if you’re willing to do the work is ‘The Seven Stages of Money Maturity’ by George Kinder. Changing our approach to money is hard because it’s so ingrained in who we are.
Should You Have a Prenup?
A prenuptial agreement (“prenup”) isn’t just for the wealthy. In fact, a prenup is just as important if not more so if you and your partner are in very different places financially, if this is a second or third marriage and there are children from previous unions, or if one spouse is entering the marriage with substantial amounts of debt.
A prenuptial agreement will allow one or both partners to protect assets accumulated prior to this current union. Again, it can be a hard conversation to have, but with care and compassion toward each other, you will feel better afterward.
A prenup is marriage insurance. It will protect you if things go south and can even spell out the alimony, child support, and other provisions of divorce in advance. More couples should have one, particularly if…
- If one spouse has a significantly higher amount of investments/assets than the other spouse, whether that be retirement, savings, or a business
- If one spouse has a significantly higher amount of debt, student loans, or credit cards
- If one spouse is going to receive a large inheritance
- There are children from a previous marriage or you’re coming into a second marriage each with your own significant assets
Should You Keep Your Finances Together or Separate?
There isn’t one right answer to this question. There are pros and cons to each, and it comes down to personal choice. Even if you choose to keep your finances separate, you still need to sit down regularly and discuss where you are financially, both as a couple and individually. But separate doesn’t mean no accountability.
There are different ways to approach combining your banking and credit card accounts. You can keep accounts separate, combine them, or do a little of each. Combining them will make it easier to manage, but if that creates more disagreements on spending, is it worth it? Be careful, though; if you have a joint credit card, both of you are responsible for the balance. Again, it is important to set appropriate boundaries around money.
Make Sure Estate Planning is on Your Wedding To-Do List
You’d be surprised how many people do not have estate planning documents. I’m not just talking about newlyweds. I’ve seen couples married for 25 years who don’t have a plan for their estate.
Here’s a quick list of documents you need:
- Will: Directs where to send your assets (the ones that don’t have beneficiaries listed), guardians for your children, and names an executor who will carry out your wishes.
- Power of Attorney: If you become incapacitated, this names someone to act in your interest.
- Healthcare Power of Attorney: Allows someone you deem responsible for making important medical decisions on your behalf.
- Living Will: Lays out your end-of-life wishes. Do you want to be resuscitated if your heart stops or do you want machines to keep you alive?
Having these documents in place removes the guesswork at a time of difficult decisions. When you come together to draw up your estate documents (strongly recommended), you may find issues there as well if you haven’t talked them through prior to meeting with the attorney.
Marital Finances Take Work, Just Like Marriage Itself
Marriage is a partnership. Treat the finances as a business. Financial secrets are the quickest way to sink the business and, more importantly, trust. You don’t have to account for every penny you spend, but don’t keep things hidden, either.
Financial harmony is not a one time only affair. Unexpected expenses, job changes or loss, children and so much more all make balancing the family books difficult. But throughout it all, if you can come together with love and respect, and talk calmly and openly, you’ll be setting yourself up for the best chance of financial, and marital, success.
And if at any point you feel a professional guide would be useful as you navigate the tricky terrain of marital finances, then I’m here to help. I’d love for you to get in touch and share your story.
A note from Mary Meadows: This post is the second in a series on navigating life changes, in which I will cover important things to consider during different major life events that can all too often upend a financial plan. Read part one of this series on preparing for a job change here.