Money is a crucial aspect of life, particularly in partnerships. It influences every decision, from daily spending to long-term planning. As such, everyone must devote significant effort and attention to financial management. Unfortunately, the National Institute of Health found that money is the top reason for marital disagreements in the first and third years of living together.
As a general rule, couples should discuss finances before marriage to avoid potential relationship breakdowns. Whether it’s your ideal lifestyle or money habits, it pays to know how to facilitate a fruitful discussion around these topics with your would-be spouse.
What Financial Matters to Discuss Before Marriage
A strong foundation for your future with your spouse starts with honest and open communication regarding finances. It prevents problems and ensures you both work toward common goals.
Financial background
Beyond personalities, life stories, and family members, getting to know your partner’s financial background is also essential. How much are they earning? Do they have real estate properties? Understanding each other’s economic situation can help you plan for the future and avoid surprises. Then, be straightforward about debts you might each have, whether student loans or credit card debt.
Financial roles and responsibilities
Did you know that only 43% of couples have a joint account? The rest have individual accounts or a combination of both. Ask yourselves whether you’ll have a separate account. There’s no right or wrong answer, but it’s crucial to agree on a system that works for both of you to prevent conflicts. You can also avoid misunderstandings when you decide who will monitor the budget, pay bills, or do taxes.
Major life events
Budgeting for your upcoming wedding and honeymoon is a good starting point. How much are you willing to spend on both? Naturally, a huge figure means you’ll have less money left over. You should also discuss handling significant expenses like buying a house or a car.
If you plan to have children, consider the cost of raising them, their education, and funding their hobbies and interests. Don’t forget to discuss health and insurance matters to make sure you’re ready to take on emergencies.
Lifestyle
It is also crucial to agree on the lifestyle you want as a couple, as this will be a massive factor in your finances. Will both of you work, or will one stay home to care for your child and house? How often do you want to travel or eat out? How do you want to live after you retire?
Deciding on a budget and savings that align with your lifestyle and retirement goals is fundamental to this discussion. If you want to experience the world with your significant other post-employment, you must start building a sizable retirement fund as soon as possible.
Estate planning and legal considerations
Don’t forget to tackle your prenuptial agreement and will. These topics may be uncomfortable, especially if you aren’t married yet. But having a plan lets you rest assured your loved ones, including your future children, are financially secure. It’s also an essential point of discussion to protect against legal troubles if—knock on wood—you get a divorce.
How to Discuss Finances with Your Partner
Practicing these steps for financial discussions puts you and your partner on the same page before marriage.
1. Set a regular time to discuss financial matters
Establishing a routine to discuss finances can help you and your spouse-to-be stay on top of your financial situation and make informed decisions together. Whether you’ll do it monthly or quarterly, the goal is to prioritize finances. Then, you can avoid last-minute, stress-induced conversations and instead have a more relaxed discussion.
2. Structure your conversations about money
Start with an agenda to keep your discussion focused on your current financial status, including income, expenses, debts, and savings. Talk about upcoming expenses or financial goals, too. Finally, review your long-term plans, such as retirement savings and investment strategies. A structured format guarantees the discussion covers all essential topics and avoids veering off track.
3. Don’t withhold information from your partner
Honesty is crucial in any discussion, let alone in one revolving around something as important as money. Be transparent about your earnings, spending habits, and debts. Full disclosure helps build trust, allowing you and your partner to decide based on accurate information. Remember, addressing issues upfront is better than allowing them to stew and become bigger problems later.
4. Choose your battles
Money is usually a sensitive topic, and disagreements are natural. That said, it’s crucial to choose your battles wisely. Not every financial issue is worth a heated argument. When disputes arise, approach them level-headedly and listen to your partner’s perspective.
Most of all, be willing to compromise. You’re both responsible for your relationship, and your goal in these discussions is to find solutions that work for both of you, not to “win” the argument.
5. Seek professional financial advice
Sometimes, discussing finances is overwhelming, even with your partner by your side. Don’t hesitate to contact a financial advisor for help in such cases. They will help you build a comprehensive financial plan, manage investments, and address points of improvement. Some may also mediate discussions between you two and help you navigate the complex financial considerations of a relationship.
Strengthen Your Relationship with a Good Financial Plan
Discussing finances before getting married is about building a robust and transparent foundation for your relationship. Addressing these matters openly and honestly early on goes a long way to preventing misunderstandings that often arise from money issues. Most importantly, it strengthens your bond as a future married couple.
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The information contained herein should in no way be construed or interpreted as a solicitation to sell or offer to sell advisory services to any residents of any State other than the State of Utah or where otherwise legally permitted. All content is for information purposes only. It is not intended to provide any tax or legal advice or provide the basis for any financial decisions. Nor is it intended to be a projection of current or future performance or indication of future results. Moreover, this material has been derived from sources believed to be reliable but is not guaranteed as to accuracy and completeness and does not purport to be a complete analysis of the materials discussed. Purchases are subject to suitability. This requires a review of an investor’s objective, risk tolerance, and time horizons. Investing always involves risk and possible loss of capital.
Nick Carrigan
Nick trains and develops families in creating, maintaining, and growing wealth. This includes educating clients on the science and academics of investing, comprehensive financial planning, and ongoing coaching to ensure discipline for a lifetime. Nick has seen this create incredible levels of freedom, fulfillment, and love for the families he works with.
