If marriage is in your future, you’re probably inundated with thoughts about how you’re going to pay for that big party.
But the more important money issue is what’s going to happen with your finances after the big day. “When you marry someone, you also marry their debts, views and feelings on subjects that most people think little of during the courtship phase,” says Bill Connington, a wealth management adviser with The Astorino Financial Group in Fairfield.
And yes, money is the biggest cause of divorce. That’s why it’s essential to get it all out on the table. Now.
No matter how well you know your soon-to-be spouse’s preferences and quirks, there’s a good chance you don’t know everything about his or her finances.
You should sit down together and bare your financial souls. Share information about your debts, savings, income, spending habits and more. If you wait until after the wedding to have this conversation — or worse, if you never have it — one or both of you could be in for some big surprises.
“Communication is so important because it is the basis of the trust you build in each other,” Connington says.
You’re planning to spend your life with this person, so you need to create a game plan.
Discuss what you both want from your money lives. Some people want a nice home, a nice car and other possessions, while others value experiences such as vacations. Still others want to save for financial independence. If you and your partner aren’t working toward the same goals, it will only lead to conflict.
“It’s important to know what your partner values because that is most likely where they will spend or save their money,” says Jennifer Murray, a certified financial planner with Stonebridge Financial Advisors in Morristown.
Your personal values and goals may be the same as your partner’s, but you won’t know until you talk about it.
Strong marriages revolve around common values that are articulated, understood and executed mutually, says Laura Mattia, a certified financial planner with Baron Financial Group in Fair Lawn.
“No matter who generates the money, it is going toward our agreed values and goals,” she says. “Any other approach is substandard to a truly healthy marriage.”
Dealing with debt
One of your top goals should be to pay down debt.
If only one spouse accumulated the debt, both partners need to decide if one or both of them will be responsible for paying it off.
If you decide the person who did the spending should be the one to pay it off, remember that could mean a slowdown for savings plans for your joint goals.
If you decide to pay it off together, make sure you talk about it, so the debt-free person doesn’t start to resent the one who racked up the charges.
When you create a payoff plan, also come up with a plan for future spending, so you can avoid debt accumulation.
It takes two
When it comes time to merge your money, you need to talk about monthly expenses, savings goals and the logistics of who pays the bills.
Consider opening a joint bank account for bill-paying, and make sure both partners have access to the account.
Connington suggests sitting down together to go over the monthly bills, at least at first, so you can both see where the money is going.
“After a while, one can be responsible, but it is important for the other to check in regularly to keep abreast of where they are financially,” he says.
Mattia says having separate accounts after marriage can lead to conflict. When spouses do not agree on financial issues, she says, they often split the bills down the middle or allocate them in some agreed manner. This process assumes that both want different things for their life together, which creates resentment and separateness because they’re not working together as a team, she says.
If you decide together that one partner will manage the family finances, it’s important for both of you to stay updated on where the money goes.
Mattia says it’s common, especially for women, to choose not to get involved in financial issues.
“The men don’t particularly mind and they see themselves as sparing their wife from having to deal with something that she is not interested in,” she says. “They don’t realize that they are making their wife weak — both today, dependent upon their decisions, and vulnerable in her old age.”
Mattia says it’s a statistical reality that women will be financially responsible for themselves at some point in their lives, due to divorce, widowhood or simply choice.
You can avoid this becoming a scary situation by making sure both partners stay at least somewhat involved from the get-go.
About those wedding gifts
There’s a good chance you will see a cash infusion from wedding gifts.
Mattia suggests any money a couple receives from any source should first go toward paying down debt and then toward building up an emergency fund.
“Once those two things are accomplished, there are shorter-term goals, such as buying a house, and longer-term goals, such as building a retirement fund,” she says. “These goals need to be prioritized and understood in terms of future earnings expectations, current and anticipated health conditions and other components of the couple’s situation.”