I love my fiance, but we are money opposites in every way. He loves to spend and I’m all about saving. He has student debt and I’m debt free. He pays someone to do his taxes and I do my own.
Financially we have felt like we come from different planets but marriage is a partnership and it warrants several different conversations about money. It won’t happen overnight but these are the most important financial conversations to have with your partner before you get married.
What are our financial goals?
The first and perhaps most important conversation my fiance and I had was about our financial goals. We talk regularly about our goals because they are always changing with our financial situation. It doesn’t mean we never disagree on how much to spend and save, but when our goals our aligned, all other money conversations are much smoother.
Justin Lavelle, Chief Communications Officer of BeenVerified.com said,“Big financial messes occur because there is no communication and no common budget or goals. Both people need to know what the other is doing financially so as to be able to plan and grow.” Marriage will involve a lot of compromise but if you have the same goal in mind, you will be able to face money issues together.
Important questions to ask: How do you feel about money? Are you a penny pincher or a big spender? Where do we see ourselves financially in the next 5, 10, or 15 years? How do we plan on getting there?
What are our combined debts and assets?
I have never felt more vulnerable than the conversation I had with my fiance about our debts and assets. Laying out our baggage was scary because neither of us wanted to make the other feel burdened and selfishly it was terrifying to think of sharing our assets.
If you and your significant other are having a hard time vocalizing your debts and assets, Bradford & Gordon’s founding partner, Derek Bradford insists that couples, “ write things down before discussing them. This way you won’t be as afraid to share what can be really hard things to talk about. Each partner should separately write down their answers and then sit down together and talk about each of them.”
Important questions to ask: What is your biggest financial stressor? How much money do you make right now? How much debt do you have and where does it come from? What are your assets and how do we plan on combining them? What is your credit score?
How did your family handle money?
Money has always been a stressful conversation in my household. Each of my parents have always feels like they can handle the money better. The mentality of “I know what’s best” is a mindset I’ve had to overcome. My fiance is much less argumentative about money and together we’ve become more collaborative.
Shadeen Francis, marriage and family therapist explains that “We often develop our values based on what we saw growing up – or didn’t see. Much of what we absorb is implicit and can carry over into how we learn to negotiate with our partners. Partners may be unknowingly bringing in bad money habits, and it is useful to explore these upfront.”
Important questions to ask: Were money conversations casual, or stressful in your family? How did your family handle unexpected money issues? What did you learn from them that you like or don’t like?
How should we structure our accounts?
Getting married doesn’t mean you have to have a joint account. Some couples feel that splitting expenses equally allows each person to maintain a greater sense of financial freedom. However, my fiance and I have found that sharing an account makes money a more unifying experience. No matter how you choose to structure your accounts, make sure you both agree.
Important questions to ask: Do we want to have joint accounts? What, if anything, will be kept separate?
What’s our monthly budget?
Creating a budget is important whether you choose to have joint or separate accounts. If you have a joint account, delegating expenses can make it easier for you to track which money goes in and out. If you have separate accounts, this is a good way to make sure each party contributes equally. Either way, it is helpful to keep a spreadsheet of your income and expenses.
Some couples choose one person to handle paying the bills but Melinda Kibler, CFP with Palisades Hudson Financial Group, stresses that, “if there is one person handling all the finances, the other person should be sure to ask for a review at least four times a year to stay in the loop. Also, any major decisions should still be made together as a couple.”
Important questions to ask: What are our monthly payments? Will one person pay all of the bills or will we split the responsibility? What money will be left over for spending and saving? What expenses are most important to you? What expenses can you cut down on?
How can we maintain money independence?
For better or for worse, you are financially tied to your spouse but it shouldn’t feel like a ball and chain. Having freedom to buy a new pair of shoes or a personal savings account for fun money can be very healthy in a relationship. After you’ve created a budget with your expenses and savings, split what is left over 50/50. Still make large purchases together but have a limit that each person can spend under without consulting the other.
Important questions to ask: What dollar limit should require a discussion before any purchases are made?
Whose insurance should we be on?
Newlyweds have a unique opportunity to enroll in healthcare outside of the national yearly open enrollment period. This life event allows you and your partner to discuss the option of taking on each other’s health care provider.
Micah Pratt, manager of Medicare Health Plans encourages couples to, “compare what having two individual health insurance policies, that often have lower monthly premiums, may cost compared to having a family policy. If the couple is both working, we recommend looking at both employers’ coverage options to determine which provider offers the most comprehensive coverage for their family’s needs at the lowest prices.”
Important questions to ask: Do we need a family policy or can we remain on our individual policies? What is the cost difference of having a family policy over individual policies? What policy offers the most coverage at the best price?
How should we plan for retirement?
Retirement may seem far away or just around the corner. Either way, it takes a lifetime to prepare for. My fiance and I talked about retirement rather quickly since a portion of our paycheck goes straight into our 401K’s. Talking about how much money you make is a great time to bring up retirement.
Important questions to ask: How much money per paycheck goes toward retirement? What percent does your company match?
Talking about money with your partner can help you prepare for a more secure financial future. Make sure you have these money conversations before you tie the knot.