With more than 2.4 million couples expected to tie the knot this year, many couples want to know the secret to a happy marriage. While things like, not going to bed angry and making time for each other are important, one of the keys to a successful marriage is one that usually isn’t top of mind for many newlyweds … talking about money.
As a financial advisor, I work with many couples and families on planning for their futures, and one of the most important ways to a healthy and happy relationship comes from having open and frequent discussions about finances.
When it comes to money and marriage, couples can start by having discussions on their views on the ABCDs of finances.
A = Adulting
It’s important to discuss how you will work together when it comes to financial matters such as paying bills, filing taxes and making financial decisions about things like health and car insurance or cell phone bills. For example, who will be responsible for paying the bills each month? Will one of you be responsible, or will you share the duties? If you are both employed, will you each keep your own employer’s health insurance, or does it make sense to seek coverage from one spouse’s employer if there are significant savings? Do you each have a cell phone, if so, will you combine your accounts and have a shared or family plan to leverage potential savings? Regardless of who takes the lead on financial matters, both partners need to discuss these decisions. Additionally, if most of the responsibility falls to one spouse, then it’s equally important for the other spouse to be part of these decisions and have insight into the overall financial wellbeing of the marriage.
B = Babies
A 2015 report by the U.S. Department of Agriculture estimated that raising a child from birth to age 17 costs parents an average of $233,610. With inflation, that number is closer to $286,000 today.
Having a child is one of the biggest expenses a couple will likely experience during their marriage, so it’s important to have money discussions before having children. How many children do you each want, will you both work after your children are born or will one of you stay home to provide care? Understanding expenses such as childcare or the impact that the loss of one spouse’s income will have on your family’s finances if one of you quits your job to stay home to raise the child.
As your child grows, how will you teach them about money and responsible spending habits? Will you buy them a car when they turn 16 or will they need to pay for part of the expense? My husband and I, for example, matched every dollar our son saved towards a new car so he had an ownership interest in it. And as your child approaches college, will you pay for your child’s college tuition, will you take out loans or will your child help pay their way?
Having open discussions around money can help your child develop positive money habits as they head out on their own. Discussing financial expectations early on will also ensure you’re all on the same page and that there are no surprises.
C = Cash Flow
How will you handle the monthly cash flow? Will you have joint checking/savings accounts, or will you each have your own accounts? Do you need to ask each other for permission before a major purchase, or is there a certain dollar threshold of expenses you agree to have a discussion on before purchasing? Does one of you have a hobby like gaming, golfing or photography that will need to be budgeted for? Then if you have excess cash flow, where will the money go – towards emergency savings or an investment account?
D = Debt
Often couples come into a marriage with some debt, be it credit card debt, student loan debt or previous home or car loans, so as a couple you need to discuss how you will manage that debt as a couple. Will you assume the responsibility of paying down debt together, or will the person who brought the debt into the marriage be responsible for tackling it on their own? If you take on new debt as a couple for a purchase such as a new home or a new vehicle, how much debt level is each person comfortable with? Will you save for a down payment or finance the purchase? And further down the road, if money is tight, how will you handle tightening the budget? Having these conversations before these things occur can help ease stressors around money.
Every financial decision a couple makes will bring them closer or further away from their financial goals. Having discussions early on and regularly throughout the marriage will hopefully help bring you closer together, closer towards your financial goals and help lead to a long and happy marriage.
Carson Partners offers investment advisory service through CWM, LLC, an SEC Registered Investment Advisor. Carson Partners, a division of CWM, LLC, is a nationwide partnership of advisors. Carson Coaching and CWM, LLC are separate but affiliated companies and wholly-owned subsidiaries of Carson Holdings, LLC. Carson Coaching does not provide advisory services.