Love and money can be complicated. Here’s how to deal with finances before, during and – if needed – after marriage.
How often do you and your partner reach a mutually agreeable choice when it comes to your wealth and finances? An article from marriage.com lists money and communication as two of the top three reasons for divorce. So when it comes to marriage, involving both individuals in financial decisions could help to foster a more stable relationship.
Before
Before you walk down the aisle or live together, it’s important to have open conversations about finances. Here are some ideas to get you started:
Be honest about your financial history.
When it comes to your financial history, it pays for you both to be honest. If the person you are marrying has a lot of debt or has filed for bankruptcy, you should be aware of this. Achieving other financial objectives or becoming eligible for a mortgage jointly may be affected by these factors.
Discuss your goals—shared and individual.
When was the last time you compared notes about what you both want from life? Before tying the knot, remember people’s goals for themselves as individuals and as a couple can change, so a check-in is a good idea. Why not try making a list each on your most important goals, ranked from 1 to 10 and then compare notes? Being clear from the beginning on your financial expectations and objectives could benefit you when it comes to making better decisions together. You can also use your goals as a helpful reminder of the reasons behind the things you do.
Propose a prenup.
You may think only the wealthy need prenuptial agreements, but anyone coming into a marriage with personal assets or dependents should consider one. They may not be right for everyone, but they can be helpful when it comes to passing on property to your children or protecting yourself from your spouse’s debt.
Don’t start your life together in debt.
You may have dreamed of a fairy tale wedding, but is it worth starting your new life in debt for the sake of an extravagant celebration? In addition to affecting your future finances, having more debt may shift your conversations about money toward the negative.
During
Every time there’s a job change, children enter the picture or new cars and homes appear on the horizon, your financial situation changes. And this means you should have an ongoing conversation with your spouse and your wealth manager about finances – at the very least, check in on a regular basis.
Track your spending.
It’s easier to keep your spending in check when you hold each other accountable. This step starts with creating a household budget, then being specific about spending from there. You may agree that each partner has a certain amount of disposable weekly or monthly income, or you could decide to put all spending money into an account earmarked for that purpose.
Tell the truth about your purchases.
If you tend to hide shopping bags from your spouse (one in three couples who argue about money have hidden purchases from each other), this may jeopardise your financial planning. If you and your spouse don’t have the complete financial picture, how can you accurately manage it?
Work on your financial priorities together.
Dreams and aspirations change, which is why it’s important to have regular check-ins with your spouse about financial goals – but short- and long-term. Rank the top three financial priorities and have a weekly or monthly meeting to track your progress. This will give you the opportunity to change course if you need to.
Be willing to give up some control.
Effective mutual decision-making involves a willingness to cooperate and compromise. If you are the one in the relationship who makes all of the decisions, consider why and how you could better encourage your spouse’s input on financial matters.
A reality check in stressful times.
Even the best wealth plan can fail if you panic during times of market volatility and uncertainty and make rash decisions. During this time, you and your spouse can potentially help each other when one of you becomes nervous and allows emotion to take precedence over rational thought.
After
No one enters a marriage thinking it’s going to end, but finances can turn an amicable divorce into a hostile one. If you’re separated, consider this:
Heed the advice of professionals.
When it comes to love and money, opinions get heated. Try to avoid listening to your co-workers’ advice and get a professional’s help instead. Your wealth manager can guide you through some of the practical aspects of this emotional time and be an unbiased resource you can trust.
Open separate bank accounts.
It’s best to close joint accounts and open new separate accounts rather than adding or removing names; it’ll give you a sense of security that you’re the only one with access. Change your direct deposit to go into the new account and start budgeting for yourself immediately.
Boost your financial knowledge.
If one of you has less investment acumen than does the other—or at least feels that you have less—consider reading investment primers from reputable sources, then dive deeper once you’re confident you understand the basics.
A healthy relationship with finances and the ability to be honest about them will contribute to a healthy relationship with your spouse and can help set your marriage up for success.
Sources: daveramsey.com; bankrate.com; marriage.com, morganstanley.com
The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete.
Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation.
