How to Talk About Money Before You're Married

4 min read

July 15, 2015

Please welcome XYPN member Cathy Derus to the blog today! Cathy just officially launched her own financial planning firm, Brightwater Financial, and is eager to share her knowledge and expertise to help you achieve your financial goals.

Talk with Your Significant Other.png

It's wedding season! Whether you're saying your vows or renewing them, money can be a big source of tension in relationships -- especially if she makes more.

While it's best to discuss finances before the relationship gets too serious, approximately 20% to 35% of couples in their 20s and 30s surveyed by Country Financial said they didn't discuss how they would manage their finances together before saying, "I do."

If you haven't chatted about finances yet, it's never too late! Schedule a date with your significant other and take a look at your financial situation before meeting. (Not exactly sure what that looks like? Mint is a great tool for giving you the big picture.)

Even if you made it a habit to talk about money before getting married, it's a good idea to review these topics on a regular basis. Your priorities and financial situation can change over time due to new jobs, an expanding family, approaching retirement, and so on.

How to Talk About Money

If this is your first time to talk about money with your significant other -- before or after you've tied the knot -- feel free to start with just a few of the high-level topics and gradually work your way through the list:

What are your dreams for the future?

Does this include buying a house or condo?
Having kids and will one or both parents work? Travel?

What are your financial goals?

Financial independence by a certain age?
Paying for your children's college education?
Starting a business?

Are you a saver or spender?

What are necessities versus luxuries?

Think about going out to eat, cable TV, vacations, etc.

Do you have a budget, and how will you manage money?

How will you create one with your joint expenses?
Where should your money go?
How much should be put towards spending, savings, investing, and/or repaying debt?
Should we have a joint checking and/or savings account, separate accounts, or both?
Who is going to be responsible for making sure that bills are paid on time?

What are your assets?

Count your checking, savings, retirement (401(k) and IRA), and investment accounts
Look at real estate and other possessions you own, like cars.

How much do debt do you hold?

This includes credit cards, student loans, car payments, and mortgages.
How do you plan on paying down any debt?

How's your credit?

If you're not sure, you can get a free estimate of your credit score from Credit Karma.
Or you can warm up to this topic by sharing your general credit history. When did you get your first card? How many do you have? Do you carry a balance or pay it off each month?

How will you manage money for the long-term?

Do you plan on managing your finances on your own?
Or do you need some extra help, even if it's just to set up a budget?

After the Big Day

You should also consider discussing what to do with your monetary gifts from the wedding. If you don’t have time to make a deposit before leaving for your honeymoon, have a trusted family member deposit the checks at the bank for you.

You’ll also have to decide how to use that money. Perhaps you'll use it to pay bills from the wedding, save for a house, or pay down debt.

Once you’re all settled back in from the wedding and honeymoon, the real financial fun begins.

What to Think About as You Build a Life Together

As you settle into everyday life, you need to decide what to do with everyday financial decisions. How will you actually merge your finances? Depending on your bank, you might be able to open accounts online or you might have to take a trip to the bank with a copy of your marriage certificate.

One option is to have joint savings and checking accounts and then separate credit cards. Paychecks can be deposited into the checking account and used to pay all common and personal bills.

Other couples might have joint and separate checking accounts. The joint account is used to pay common bills such as rent or mortgage, utilities, and food, and the separate accounts are used to pay personal bills. You can set up automatic transfers to move money into savings, retirement, and investment accounts.

Whichever method you use, it’s important to maintain separate credit cards. You'll each keep growing and maintaining your credit score. Also, credit reports don’t automatically merge once you’re married unless you have joint accounts. So take special care of your credit scores and history if you’re looking to buy a home together. One spouse’s negative credit history could impact your mortgage rates.

Finally, marriage is one of the qualifying life events that allows you to change your insurance enrollment. If you want to add, modify, or drop any coverage, be sure it's completed within 30 days of the wedding. You'll need to provide proof of marriage, such as a marriage certificate, so order a few extra. And don't forget to update the beneficiary of any insurance policies and financial accounts.

Overall, communication is key to a successful relationship and marriage. So agree to be an open book and work together towards a common goal.

Do you have any other tips for merging finances?

About the Author: Cathy Derus, CPA founded Brightwater Financial to help young couples and parents plan for a brighter future. Brightwater Financial takes a fresh approach to financial planning by discovering your personal values and creating a saving, investing, and spending plan that aligns with these values.