Ed Note: Research has identified money as the number one point of conflict for most couples — and 49% of divorced people in a recent study said money fights were so frequent in their marriage that they anticipate financial conflict in their next relationship, too. Yikes. Before heading to the altar, it’s important to discuss how you’re going to manage your money as a couple. We turned to Kristina at DINKS Finance for some advice on approaching ‘the talk’ with your spouse-to-be.
When you are in the middle of planning your wedding, having the “money talk” with your spouse may be the last thing on your list. But getting hitched costs money, and therefore having the (potentially uncomfortable but very necessary) “money talk” with your spouse should definitely be on your wedding to-do list.
As a financial professional, I have seen couples approach their finances in many different ways. Throughout my 12 years in the banking industry, I’ve seen them go to extreme measures on both ends of the spectrum, from keeping their bank accounts so separate that they each deal at a different bank, to merging all of their finances down to the last penny. Very recently, I met a couple who shared one debit card.
Financial professionals are like doctors in the sense that we have a strict confidentiality clause. We are not allowed to share a client’s personal or financial information with any other clients, even if that other client is your spouse. Financial planning is an important aspect in a marriage because it is the one thing that remains constant throughout every stage of the marriage, from the engagement to the divorce. This is exactly why most financial professionals encourage newly cohabitating and newly engaged couples to have the “money talk” as soon as possible.
You and your spouse can have the “money talk” at your kitchen table or you can have it in my office at the bank, but either way, you should definitely have the “money talk” before you say “I do”, otherwise you may be headed down the aisle to a financial disaster. It is sad to say, but it is true that money and the stress of mismanaging money cause many marriages to end in divorce.
I definitely don’t suggest that couples have the “money talk” on their first date, but before you take the next step and move in together, get engaged, or get married, the topic of how you plan to manage your money as a couple has to come up. Talking about money shouldn’t be too uncomfortable for couples who are in an intimate and committed relationship, but it can be an emotional conversation if it is not approached correctly.
Use these guidelines for your Couples Money Talk:
- Take This Man or Woman to be Your Spouse. You are merging your lives, but you also have to decide if you are merging your bank accounts. The advantage of having joint bank accounts is that you will save on monthly bank fees. The disadvantage of having joint bank accounts is that multiple transactions can be hard to manage.
- To Have and To Hold. Many couples choose to have their accounts at the same bank for convenience, but some couples choose to keep their bank accounts at separate institutions because they don’t want to change branches or banks. A nice compromise is to maintain separate savings and investment accounts, but have a joint bank account at the same institution for monthly couple’s expenses.
- Through Sickness and In Health. Your spouse’s money mentality determines their financial habits. Maybe your spouse is an obsessive spender and you are a compulsive saver, so as a couple you balance each other out. Talking about your monthly incomes and spending habits will help determine your cost of living and your monthly couple’s budget.
- To Honor and Cherish. Having a prenuptial agreement is not a bad marriage omen and it does not mean that you are marrying for money. It just means that spouses respect each others’ individual assets. A prenuptial agreement protects your financial future in case the marriage comes to an end. The one thing that people never seem to remember is that when you get married you are in love, but you may not be on the best of terms with your spouse when your marriage is coming to an end.
- Until Death Do You Part. Estate planning is a very important part of the financial planning process — and as a financial professional, I can tell you that it is also the most overlooked. Having a will ensures that your final personal and financial wishes are respected. This includes paying your final estate taxes, paying off any outstanding debts, making funeral arrangements, and leaving a financial legacy to your spouse.