Money and Marriage
Spring’s warmer months signal the start of the wedding industry’s busiest time of year. According to The Knot, June 18 and May 21 were the most popular wedding days in 2016. Planning a wedding can be a joyous time for many couples filled with discussions about place settings, photographers, reception venues and honeymoon destinations as they work together on wedding finances and devise a budget. Yet at the same time, many couples cannot seem to broach the topic of their personal finances. According to a poll by the National Foundation for Credit Counseling, nearly 70 percent of adults had negative feelings about discussing money with a fiancé. The pledge for richer or poorer could prove a challenge if couples avoid talking about money matters before they say “I do.”
As one of the leading causes of stress and contention in a marriage, it’s wise for newly engaged couples to have a serious conversation about their finances before walking down the aisle.
“Couples often will avoid having the conversation because they’re simply uncomfortable with the subject matter,” says Lindsey Nichols, senior vice president and wealth management administrator for PlainsCapital Bank. According to Nichols, the way a person approaches money is heavily influenced by a number of factors including their family and how they were raised. She adds that because this contributes to a person’s money habits, it’s important to know upfront any differences a couple may have in the way they approach finances. Nichols, who is also a Certified Trust and Financial Advisor, reminds clients that a marriage isn’t just the merging of two people’s lives, but the merging of their finances, as well.
To help ease couples into that all important pre-marriage money conversation, Nichols recommends following the Three B’s:
Be honest. Transparency is the foundation to building trust. Discuss each other’s money habits and be upfront with your partner if you tend to be more of a saver or spender. It’s also a good idea to have a conversation about assets (bank accounts, investments) and liabilities (credit card debt, student loan, mortgage, etc.), as your combined income and debt will directly impact how you live. Credit scores are important as well, since they can determine the interest rate you receive for any future large purchases, like a car or a home. Talking openly and honestly about your respective approaches to finances early on is key. If there are any concerns or issues, you’re in a position to start addressing them in advance, rather than be hit with surprises later.
Be partners. From saving for a home, vacations, private school or retirement, you want to both be on the same page in how you approach financial considerations and determine goals. Communication is key to any working partnership – marriage or otherwise. Also, discuss if one person will take the lead role in being responsible for paying the bills, managing the budget and staying on top of joint bank accounts and investments. And even if you agree to a system in advance, it’s important to communicate frequently, so that no one feels burdened or out of the loop.
Be proactive. Once you’ve established your joint financial goals, it’s a good idea to start developing a strategy and budget that works for both of you. Free online financial calculators help take the guess work out of how much to save for things like a vehicle, kid’s college, or retirement. With your financial priorities laid out and a budget in place, you can then determine how much money to allocate to your savings and/or retirement plan and which financial vehicles, such as savings and money market accounts or investments like an IRA, will help you achieve your objectives. Many banks provide financial advisory services for customers. And while there are lots of books and websites dedicated to helping people with their finances, having a professional who knows you and understands your objectives as a couple personally guide you through the planning process can go a long way in terms of addressing key areas of interest or alleviate possible financial concerns.
Finally, Nichols adds that just because a couple is getting married, it doesn’t mean they have to merge all of their finances. They may want to establish a joint checking account to pay for shared expenses like the mortgage, a car payment and utilities, while also keeping separate accounts to pay for personal things like gifts and clothes. There are other options, too, like merging their money and then allotting a monthly allowance for separate expenses.
As the saying goes, money isn’t everything, but it is an important part of marriage. There are many good ways to managing money, so it’s important to find a strategy tailored to your needs and style as a couple.