Something about a warm summer night whispers romance. You can find yourself on an enchanting date one week, and engaged the next! If you’re getting married this summer don’t worry, you’re not the only victim of the lovebug. An estimated 13 percent of couples decide to get hitched this time of year, affectionately known as ‘wedding season.’
These days, marriage is hard work. Many marriages fail within the first few years, for reasons more serious than a toilet seat left up or a forgotten anniversary. Money tops the list as one of the leading causes of divorce in America . In 2007 alone, there were an estimated 7.6 marriages for every 1,000 people, and 3.6 divorces. With figures like these, preparing yourself to answer the money question could be the best investment you make in your future marriage, even more important than whether to pay for an open bar at your wedding reception.
What’s the big deal?
It’s not hard to understand why money can end so many married relationships. Sharing control of your finances with another person means compromise and trust, which can be difficult even with someone you have known for a long time.
Part of the problem could be that men and women traditionally view money differently. “I find that women tend to view money as a means of security, while men view it as a source of power and status,” said Lauren Lindsay, CFP (Certified Financial Planner) and director of financial planning at Personal Financial Advisors in Covington, La. “Women may be more focused on paying for mortgage and childcare, while men are concerned about the value of their home and stock.”
While this may not be true for all women or men, one thing is for sure: the way you think about money determines what you do with it. The engagement period is the perfect time to proactively protect your future marriage by talking through important money matters. Olivia Mellan, psychotherapist, money coach and author of “Your Money Style”, suggests setting up time each week where you can sit down and talk about money.
“No matter when people get married, we all have money secrets,” Mellan said. “Honest, regular money talks can help point out the trouble spots so that you know what you’re getting into before you make a lifetime commitment.”
If you’re not sure where to start, we’ve put together some simple conversation starters that can help.
Convo 1: Spending and Saving
The first thing you’ll want to figure out is how your partner thinks about money. Your views about money may have been shaped by a number of factors such as what you picked up from your parents, the media, and even bad financial decisions you’ve made in the past. Your partner is no different.
These money values often translate into money habits, so it’s important that you identify upfront any differences in how you think about money. Open dialogue can shed light on any financial strengths and weaknesses that you may come up against in the future.
“More often than not, you marry someone who does not share your same money personality,” Lindsay says. “Usually what happens is that the spender learns from the saver how to be less of a spender and more of a saver.”
Probe deep and ask your partner why they think about money the way they do. Here are a few lead-in questions that you can use to help foster conversation:
• What do you think about “rainy day” funds? Do you budget savings?
• What’s the last really expensive thing you bought on an impulse? How often do you impulse shop?
• How important are name brands to you? Do you spend a lot of money on things you could find for cheaper prices?
• Have you started saving for retirement?
• How often do you borrow money from others? How do you feel about being in debt?
Be careful not to be judgmental. Remember that money can be a sensitive subject so keep an open mind and create an environment of trust where your partner feels safe to share!
Convo 2: Income
Asking anyone how much they earn annually can be taboo, but if you’re considering spending the rest of your life with your partner, you have a need to know. Your annual household income will determine where and how you live, how much you are able to save, and even your quality of life. Before getting married, talk with your future spouse about assets and liabilities. An asset is something you own, like a bank account, or an investment. A liability is a debt that you owe someone else such as a credit card balance, a mortgage, or student loan.
Richard Vodra, first Vice-President at Spire Investment Management, recommends that couples sit down together, look over paystubs and bills, and do the math. “Financial chaos is a very bad indicator for marriage,” Vodra said. “You don’t have to be rich, but you do need to make sure you’re able to support each other.”
Figure out if your joint income will be enough to support your new family, or if it makes sense to defer marriage or prolong your engagement until you are both financially stable.
Convo 3: Debt Damage
Like it or not, lots of people have debt! It could be from a student loan, a credit card you use a little too often, or bills that have accumulated over time. When you get married, you may become directly responsible for your spouse’s debts, so you should know what you’re getting yourself into!
Ask your partner how much debt they have and if they have a plan for paying it off. It’s also important to know your partner’s credit score as it may determine the interest rates you receive on large purchases such as a home or car.
“Be financially naked,” Vodra advises. “You may have debt that you don’t want the other person to know about because you’re scared, but it’s always better to fess up.”
Having bad credit isn’t the end of the world. In fact, there are ways to improve your credit score if you make on-time payments for six months in a row. It may be uncomfortable to share your financial mistakes with your partner, but it’s necessary if you’re going to establish a plan about how you will tackle it.
Convo. 4: Developing Joint Goals
Up until now, we’ve focused getting to know your partner’s money values and habits. But it’s also important that you discuss joint financial goals for your future marriage.
Olivia Mellan recommends this exercise—Make a list of your individual short and long-term goals. Have your partner do the same. Then come together and make a list of short and long-term goals together. Notice the similarities on your individual and combined lists and begin making financial preparations to accomplish those goals.
Convo 5: Joint Money Management
One of the most important money conversations you will need to have in preparation for your marriage is how to pay for expenses. Who will balance the checkbook and pay the bills? What happens when you want your own spending money? These are all valid questions that you and your partner will need to answer together.
Deciding who takes on the responsibility of paying the bills and handling financial matters can be a question of convenience or expertise. One partner may have more time to handle these aspects of the marriage or could be more responsible.
No matter who takes on these duties, be sure that you and your spouse both know what is going on with your money and make financial decisions together.
Finally, don’t make the mistake of thinking that getting married means you have to merge all your finances. The experts interviewed for this article recommend that both spouses establish a joint account where you transfer a percentage of your income used to pay for shared expenses like your mortgage and groceries, and keep separate accounts to pay for personal purchases like Christmas gifts and clothes.
There are also other options like merging money and then allotting a monthly allowance, or separating expenses.
“There are many good ways to manage money in a marriage,” Vodra says. “Find one that works for you and stick with it.”