When couples decide to get married, they’re committing to spending their lives together — and to merging a long list of life’s elements that, in most cases, previously pertained solely to each individual member of the couple. These newly shared things can range from their possessions, pets and families to their residence, their vehicles, their vacations, and often even their last name. And of all the once-individual things that tying the knot makes mutual, one stands out as the most likely to cause conflict: the couple’s newly merged finances.
In fact, polling indicates that money is the No. 1 thing American couples fight about. So, before you say “I do,” it’s important to make sure you’re on the same page when it comes to your money and your financial goals. To help ensure that your marital bliss will be able to survive the challenges that financial disagreements can bring, consider taking these eight steps that can help foster your financial compatibility before you walk down the aisle:
- Embrace transparency — As with all aspects of a successful marriage, transparency and communication are key to creating a successful financial partnership. Before you and your partner walk down the aisle, have an open and honest discussion about your views on money and spending. Be sure to cover things like how you were taught to approach finances and debt while growing up — and try to gain a solid understanding of one another’s big-picture financial views and values. Of course, you won’t always agree on everything. But by having a friendly, judgment-free conversation, you can work to establish common ground when it comes to your overarching approaches and views on finances.
- … and talk about your individual financial situations — It’s also important that each of you know about one another’s current financial situation — and especially about any potentially uncomfortable topics like sizable outstanding debts and/or any bad marks on your credit histories. (Any important financial information that either of you hide is sure to come out over time in the marriage, and keeping it a secret will only serve to erode your partner’s trust in you.) Be sure to also share information on important financial topics like your incomes, your credit scores, your bank account balances, any retirement accounts or real estate holdings, etc. Ultimately, the more you know about one another’s finances before getting married, the better.
- Discuss your long-term financial goals — Now that you both have a better understanding of one another’s financial philosophy/values and each of you knows where your partner currently stands financially, take some time to discuss your financial goals for your future together. Some of the important topics to touch on might be whether or not you’d like to have children, when/if you want to purchase a home together, your thoughts on when and where you’d like to retire, whether you’d like to someday own your own business, and how often you like to travel. By having a better understanding of what you each envision for your financial future, you can better avoid future conflicts about financial priorities and spending.
- Be ready to budget — Few of us enjoy the process of creating — or living on — a budget. But establishing and following a household budget is essential to achieving financial well-being with your partner in marriage. Be prepared to, when the time comes, mutually create a household spending plan that incorporates both of your financial priorities. Success in this area will require compromise on what you view as the most important things you’ll want to spend your money on and save up for, and starting the discussion in advance can help reduce the potential for tensions in the future. One especially important topic to cover: Make sure to establish a minimum dollar amount at which you both agree you should discuss any spending once you’re together. A $40 or $50 expenditure is, in most cases, a financial decision you’ll both feel OK about making on your own. But should you speak with your partner before spending $100? Or $500? Or $1,000? Establish a solo spending limit you’re both comfortable with in advance so that neither of you are caught off guard by substantial purchases your partner may make in the future.
- Determine how you’ll deal with debt — Often, couples who are making plans to get married have yet to take some of the big (and expensive) financial steps that can increase the total amount of debt they are carrying — including major life moves like buying a home, starting a business or having kids. And because their debts tend to be lower and their disposable income has often not yet been allocated to such expenses, the early years of marriage can present a great opportunity to knock down debt. Whether this is the case for you and your spouse or not, make a plan to pay down as much of your now-mutual debt as possible, as doing so will help you to have more available funds to meet your financial goals moving forward.
- Consider your money-merging options — In most cases, couples merge their money and their financial accounts when they get married, typically for the sake of convenience. But in some cases, a groom or bride may prefer to instead maintain his or her own personal account(s) and keep his or her own finances and debt separate from his or her new spouse to maintain some level of financial autonomy. Whatever your thinking in this area may be, discuss with your partner the pros and cons of taking such steps as opening a joint checking account and/or savings account vs. maintaining your own personal accounts, then decide on the best fit for your unique financial situation(s).
- Feel out your financial roles — Sharing a household usually means sharing financial responsibilities, with each partner in the couple in charge of specific finance-related duties. Before you take the leap into marriage, have a talk about your mutual expectations regarding your future financial roles and responsibilities. Then, to pave a path for future understanding and agreement, decide who will handle regular money-related tasks such as paying bills, making investment decisions, building up savings and creating an emergency fund.
- If needed, seek professional financial advice — In most marriages, neither partner is an expert in personal finance. And when making big financial decisions such as setting up your retirement plan, starting a business, buying a home or even just deciding how many tax exemptions to claim, getting professional guidance can deliver big financial advantages, especially over the long haul. When you’re not sure what direction to take with a big family financial decision, don’t hesitate to ask for the advice of a trained financial expert to help you gain a better understanding of your options and which might best fit your personal situation and goals.
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