Getting married can be a wonderful decision! You bring two people from different backgrounds with unique experiences and family dynamics together to create a new family unit. While it is vital to ensure the love and bond between the couple is strong, the financial side of the equation can easily be overlooked.
Tying the knot naturally comes along with many lifelong financial decisions, aside from just how much are you going to spend on the wedding or honeymoon. That’s why, before getting married, we feel you should have a 360-degree understanding of your future spouse, including how they view money and want to operate financially moving forward. Let’s talk about it!
Why Is It Important to Talk About Money Before Getting Married?
Getting married is a big commitment both emotionally and financially. It is no surprise that many couples get divorced over financial issues. From working with clients for over 40 years, we’ve learned that open and honest communication around finances before getting married helps set expectations and avoid building resentment around money in the future. Understanding your fiancé’s view on money can relieve some of the stress when making big financial decisions. Not to mention, it can help avoid making poor financial decisions.
For example, if you both aspire to retire early, does it make sense to purchase a home that stretches beyond your budget? How would this impact your goal to retire early? The answer still may be yes, but looking back at your individual and joint goals when making decisions will help you understand the implications of your choices.
What Questions Should You Ask?
Before tying the knot, we encourage couples to ask each other about their money values, experiences, and aspirations. The easiest way to unveil these is to ask open-ended questions and listen actively. Below are some questions to get the conversation started:
- Are you more of a saver or a spender? What makes you one or the other?
- Why is money important to you?
- What are your experiences with money, both good and bad?
- What money pitfalls should we try to avoid?
- What do you want to use money for to get the most fulfillment out of life?
With a solid understanding of your and your partner’s views on money, you can make better future financial decisions that help achieve both of your goals.
Determining How to Handle the Finances
Once couples understand each other’s view on money, they can determine how to logistically handle the finances. For example, how will you set up your bank accounts? Do you want to put everything in one joint account; have his, hers, and ours accounts set up; or keep everything separate?
From there, you can determine how to split the responsibility of managing the finances. Is it a 50/50 split or should one person focus more on the finances while the other concentrates on another area of your lives?
Lastly, it would behoove you to determine how you want to utilize your income and save for retirement and future goals. Will you live off one person’s income and save the others? Or will each spouse save and spend equally toward household expenses? What if one spouse makes more than the other?
As you can see, there are several different ways to divvy up the financial duties, making it all the more important to brainstorm and chat through what strategy will work best for your relationship.
What About Student Loans, Credit Card Debt, or Tax Returns?
As always, financial advice is unique to each person’s situation. The advice should adapt depending on the couple’s money values and goals. For example, if one spouse has had credit card trouble, then maybe it makes sense to keep things simple with just one joint credit card. On the other hand, if the couple has travel aspirations and good credit card habits, then it could make sense to utilize credit card bonuses and perks to build up miles for future trips.
The same goes for tax returns and student loans. For instance, some may think it is a no-brainer to file married filing jointly on the tax return. But the reality could be that one spouse has student loans that are on income-driven repayments, and filing a joint tax return will increase their monthly payments beyond what they can afford.
As you can tell, rules of thumb don’t fit every situation (as is common in financial planning). When items like these come up, it is always best to have an honest conversation about them. If you don’t know where to start or what options you have, it could be beneficial to talk with a financial advisor. They can lay the options on the table, the pros and cons of each, and help guide you to the best strategy for your situation.
Tying “the Knot” Together
A few generations ago, talking about money was taboo amongst couples. Nowadays, we are seeing more dual-income households that share financial responsibilities. With that in mind, it is crucial to have these types of conversations around money to set expectations and hopefully avoid arguments down the road.
You never know what life will throw at you, but in our opinion, having a plan in place will make you more likely to handle those unexpected situations. If you need help having these conversations or determining how to handle the finances as a couple, we are here to help! You can send an email to questions@FSAinvest.com or click here to schedule a call with one of FSA’s CERTIFIED FINANCIAL PLANNER™ professionals.
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