Deciding to get married is one of the biggest decisions you will make in your life. It also carries with it the potential for a seismic shift in your personal finances.
Decisions you and your partner make regarding how the two of you will manage your money will have implications for years to come.
While the thrill of the moment should be savoured, in amongst the proposal, the engagement, the wedding, and the honeymoon — should those traditional elements be a part of your nuptials — do not forget to have the “money talk”.
The Independent asked a selection of personal finance experts and certified financial planners what they saw as the most important things to consider before tying the knot.
Be open and make a plan
“Get financially naked,” says Danetha Doe, creator of Money & Mimosas, a financial wellness platform for the self-employed.
“If you haven’t already, now is the time to share your income, debt, credit scores, and credit reports with each other,” she explains. “I recommend doing this in a relaxed atmosphere — maybe in a park with snacks and mimosas — to ease any tension that may arise.”
“You don’t want surprises,” says Mark Wernig, principal at Dowling & Yahnke Wealth Advisors. “You need a meaningful conversation with full disclosure of what one’s personal financial situation is, whether or not you decide to pursue something in a joint way and co-mingle assets. Obviously, each party needs to be well aware of what history is there.”
How you manage your finances going forward is crucial. You must consider early on whether you will have joint accounts, separate finances, or a combination. This will depend very much on your individual financial situation.
“These discussions need to be had early on to make sure that everybody is fully aware of what you are bringing into the marriage. Everybody needs to be on the same page, so it’s no shock once the wedding day arrives,” advises Akeiva Ellis, financial planner and educator with Ballentine Partners, and a CFP Board Ambassador.
“I think it’s always awkward,” adds Mr Wernig, “but there are things that need to be understood and possibly things that need to be rectified. I think that’s a pretty healthy exercise.”
Understand your partner’s relationship with money
When you have the “money talk”, you will begin to get a sense of your partner’s relationship with money, but you may need to probe deeper and be specific as people can be shy when discussing their finances.
“Ask questions like, ‘how does money make you feel, what do you want your life to look like, what are your money strengths and weaknesses and how much debt do you have?’” suggests certified financial planner Shannah Compton Game, host of the Millennial Money podcast.
“Opening the lines of communication will help you both create a financial path forward that is built on partnership. Marriage is a financial transaction as well as a love transaction, so you should never avoid talking about money.”
Ms Doe agrees: “Understand each other’s money love languages. We each have a slightly different relationship with money and what makes us happy. Take the time to understand why you each spend money the way you do.”
Further to that, she adds: “Share your money stories. What did you observe about money growing up? Our childhood experiences with finances largely influence how we engage with money as adults. The more you understand each other’s upbringing with money, the more you will understand each other.”
Stay interested, stay involved
This isn’t a one-off conversation — get into the habit of talking openly about money.
Autumn Lax, CFP, financial planner at Drucker Wealth, notes: “Some experts will say that money is the number one cause for pain in a marriage, so get comfortable with the topic early on and maintain an open line of communication regarding your spending and expectations.”
“Along those same lines, definitely develop a budget,” she adds. “You have been used to spending your way and your partner their way, now you are going to come together with different spending habits and a budget can help ensure the two mesh well!”
Ms Compton Game recommends one way of staying aware of your financial situation is making it a regular part of your time together. She encourages a weekly ‘money date’ with your partner where you set aside 20-30 minutes to look over your spending for the previous and upcoming week and make any adjustments as needed to keep on top of things. This also keeps the lines of communication open.
Mutual aspirations, with personal freedoms
This is your opportunity to decide not just what your aspirations are, but also what the boundaries are in which you can both operate independently without seeking approval from one another.
In addition to a ‘money date’, Ms Compton Game suggests setting monthly and yearly joint financial goals.
“Let these goals create intention in your spending and saving so every dollar has a purchase to move you closer to your goals,” she advises.
Ms Doe says: “Talk about your financial vision. Do you envision owning a summer home? Do you want to retire early? Be sure to talk about your big picture plans and get on the same page about where you’re headed financially!”
While working towards those goals, map out parameters for your individual spending — each of your personal discretionary spending limits. Ms Compton Game refers to this as your “money max” number.
“This is the amount of money you both can spend without questions or judgment,” she says. “Once you go above that number you both agree to a conversation and mutual agreement before the expense is incurred.”
Bring in a professional
In most cases, neither partner will be a financial expert and you will likely need help mapping out strategies, for example, to tackle debt you may have both brought into the marriage.
By hiring a certified financial planner, or consulting with an accountant, you may be able to find a more efficient way to pay off student loan debt or credit card debt that predates your relationship.
A personal finance professional will be able to help you find a pathway to more rapidly shrink your debt obligations while maximising savings or progress towards other goals.
Get that prenup!
When being idealistic about marriage, don’t also forget to be realistic. If you’re going to be open and honest about your finances, don’t forget to be honest with yourself about life — sometimes things fall apart.
“Prenuptial agreements are a must. Yes, no one likes to think about divorce and while we all envision living happily ever after, the reality is that over half of marriages end in divorce in the United States,” says Ms Doe.
“Save yourselves time, money, and frustration by ironing out those details in advance, and hopefully you’ll never have to think about it again.”