If you’re recently engaged (or if you’ve had a long engagement due to the pandemic) first of all, congrats! When you think about getting married, what are some of the first things that come to mind? Maybe sharing a beautiful home, traveling together, and jointly working towards making both your dreams come true. No matter your goals, you have to be able to communicate and work well together as a team. Some of your biggest life goals together will require money — and lots of it — which is why one of the most important conversations to have before saying ‘I do’ should be centered around finances.
Discussing finances before you get married can help you anticipate (and protect against) some of the ‘what-ifs’ that come with relationships and life, says Erin Levine, a family law attorney and the CEO and founder of Hello Divorce. “Marriage is amazing, but it’s also hard work,” she continues. “After all, transitioning from ‘me’ to ‘we’ is really about honoring your own identity while becoming part of a team. Having those tough conversations about finances before you get married can be as much an act of self-love as it is a validation to both of you that you have each other’s backs and are heading into marital life with eyes open and both feet in.”
Here, a guide to the best ways to approach this sometimes tricky and uncomfortable conversation with kindness and ease:
1) Joint Finances: I Do or I Don’t?
If you haven’t lived together before marriage or combined your finances, then you don’t want the first year of marriage to be full of arguments about whose money is whose, or who may be spending more, says Marissa Peer, the founder and creator of Rapid Transformational Therapy. Peer says most duos have tension around money somehow because until now, you could each operate as you pleased, without considering the other person. Now, things will change.
Although you may want to keep separate accounts, keep in mind that having at least one joint account that you each make deposits into every month can be very beneficial when it comes to covering joint expenses, like groceries and utilities, or even a car or house. You need to figure out what you both want things to look like in the grand scheme and the little day-to-day spending. Peer suggests answering these questions:
- Are we going to have joint accounts? Or a joint household account and separate checking accounts?
- Will we split bills 50/50, or based on income?
- How much are we going to budget for the holidays?
- How do you approach gift-giving during the holidays and birthdays?
- What do we think are essential things versus extravagances?
2) Download on debt
When you decide to share your life together, you also take on your partner’s debt and vice versa. Particularly around the time when most people wed — before the age of 35 — it’s likely one or both of you will have student loans, credit card balances, and potentially a mortgage. No matter what you owe, be open about it before you meet at the altar, recommends Andrew Westlin, a certified financial planner at Betterment. “Knowing what types of debt each of you has, the balances, and payment history are essential to developing a plan moving forward,” he continues. “Debt will undoubtedly impact your financial plan, and without a full understanding of what is at stake can cause stress on your relationship.”
Once you understand what you’re dealing with, you can put your heads together to create a game plan, as well as discuss ways you can help one another. “A partner with a better credit score can cosign on a loan if refinancing a student loan. This may help you qualify for a loan you otherwise wouldn’t qualify on your own, or a loan with a lower interest rate,” Westlin says as an example.
3) Have an open conversation about children
One of the most significant expenses you can ever have is a child. So, before you decide to become a family of two, you should be honest and open about future plans to become a family of three, four or more. Peer recommends chatting about anything related to children, including:
- Private vs. public education.
- Childcare: daycare, nannies, Au Pairs, etc.
- Extracurricular activities
- Family vacations
- Family household: cleaners, chores, midnight feedings
- Health insurance for children
Also, Levine recommends being candid about who will take time off of work when you welcome a newborn home. It can easily become a point of contention, particularly for couples who both have full-time jobs and care about their careers. “The two of you need to start thinking about whether or not your values are aligned,” she continues. “If professional growth is everything to you, but your spouse is more interested in earning ‘just enough’ to cover your current bills, this might not be an issue. Or will it? Be open and talk it through.”
4) Map out a game plan for paying bills
From your mortgage and rent to utilities and essential expenses, bills have to be paid somehow. And when you get married, it’s necessary to understand how you’ll approach the responsibility. Levine says she’s seen it all: some couples track every dollar spent on rent, groceries and utilities and then determine their contributions proportionate to their respective earnings. “Others decide to use one spouse’s income for ‘necessities’ and the other spouse’s earnings for luxury items and/or self-care,” she explains.
Levine says the worst thing you can do is assume that everything will be treated as ‘joint’ and shared equally the minute you get married. “Having a conversation about this will make you feel a lot more comfortable with opening a joint account and how that money will be spent,” she adds.
5) Be honest about your risk aversion
Some people are willing to take big risks, while others prefer life on the safe side. Those two types often fall in love and get married. As Levine says, almost all couples will argue over something to do with finances at least occasionally, and many conflicts can arise because one partner takes risks the other doesn’t agree with.
“Financial risks, like investments or business ownership usually involve a significant amount of money. Planning, saving, and strategy are all involved,” she continues. “If one partner isn’t fully on board, the relationship can suffer. But there are also ways to guard against damaging your relationship even if you are not aligned on what’s a ‘reasonable’ risk.”
6) Figure out what you’ll do when you (inevitably) disagree
No matter how well you get along, there will be times when you look at a balance sheet, a savings plan, a vacation budget, or something else, and you simply can’t agree. That’s part of life (and marriage!), and it’s 100 percent normal. However, Peer says it’s a good idea to figure out how you will agree to disagree in these situations. For example, say you agree on an amount you think is reasonable to spend on a family vacation, but your partner insists on upgrading your flights… Would they then pay for that upgrade out of their own account? Or would you be willing to reduce another area of your budget to compensate? Or what if one parent insists on expensive ballet classes when there’s a free option at the local rec center. Who will spring for that, and can you ask the grandparents to step up and chip in? Peer asks.
The goal isn’t to create two separate money lifestyles, but rather to find a middle ground that doesn’t breed resentment.
7) Brainstorm your future financial goals
Last but definitely not least: dream together! And tie some numbers to those dreams. Westlin says it’s critical to align on what you’d like your money to do for you and your family, as individuals and as a couple. “This list might include things like paying off debt, starting a family, retiring early, or traveling the world,” he continues. “Setting goals will help inform your spending and saving decisions and give you something to work towards together.”
MORE ON HERMONEY:
- I’m Getting Married: How Do I Protect Myself Financially
- The Financial Pros and Cons of Marriage
- How to Achieve Financial Independence as a Married Couple
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