Getting married is one of the most financially significant things you can do in your life. Whether you’re a financial guru before you get married or not, a lot will change when you and your spouse join finances and build your household together.
Even if you choose to keep or maintain separate accounts apart from each other, you’re still proving to the financial and bureaucratic institutions that govern our society that you and this person are now inextricably tied for better or for worse, (hopefully) forever. With that in mind, here’s what you and your future spouse need to consider before you tie the knot!
Start Before You Even Get Married
For me personally, even talking about money with my then-boyfriend, now-husband was an intimidating task. He’s much more financially savvy than I am for one thing, and I hadn’t been out on my own for that long paying bills or building credit by myself by the time we got together.
I didn’t let that stop me though, and I’m glad I asked for his help and advice. One of the first conversations we had when we talked about getting engaged was the way we handle paychecks, how much we save and spend, our big-ticket items we splurge on, and how much we pay in expenses. We also talked openly and honestly about debt, with no shame in disclosing our own individual amounts.
We talked openly and honestly about debt, with no shame in disclosing our individual amounts.
This took the stigma out of it for me, and now it’s a habit for us to casually bring up how much we’ve paid off this month or other related accomplishments. We discussed saving, investing, career goals, and retiring all before he proposed, and set ourselves up much better by having those conversations sooner rather than later. Considering that money struggles are the number one cause of divorce, it's definitely not something you should leave up to chance.
Here are some specific topics you should discuss with your fiancé before the big day:
1. What Are Your Spending Habits? Define Wants vs Needs.
Make sure your wants and needs are clearly defined, and make sure your spouse’s are the same or at least in the same ballpark. There’s nothing worse than hiding lengthy Target receipts or spending spree items from your partner, and again, that can lead to mistrust and financial stress.
Make sure your wants and needs are clearly defined and that your spouse’s are similar.
While the financial column in Slate can be entertaining, it’s also anxiety-inducing for me. Many spouses, usually husbands, frequently write about their wife’s crazy spending habits, which more often than not are somehow surprising to them. But in all fairness, maybe their wife defines a weekly manicure as a necessity to her and hasn’t communicated that to him. Have those wants vs. needs conversations sooner rather than later, and save yourself the trouble.
2. How Will You Handle Your Money?
Are you going to keep separate bank accounts, or combine everything into one? If you keep separate bank accounts, will you be combining savings? Or maybe just part of your savings? Who will be in charge of making sure you stick to the budget? Is it a team effort, or does one person feel more equipped to handle it?
If you open up a joint credit card, for example, who is in charge of making sure it's paid on time? Who will handle paying bills for utilities and student debt? What about your rent or mortgage payment?
It seems like a lot of questions, but it's good to decide beforehand rather than be hit with an avalanche of confusing choices once you're already married. Perhaps it makes the most sense for the person with more experience to handle budgeting and investments, but the person who works closest to home should drop off the rent payment. As long as both of you know your job, you'll always know that it's getting done. There's nothing worse than an unpaid credit card bill because both people thought the other one was taking care of it.
3. Set a Budget You Can Both Agree On.
For many, joining finances with your spouse means having a little extra money in your checking account each month, and more freedom to spend.
If spending more is allocated into your budget, that’s one thing, but swiping a card every day can quickly get out of hand if you’re doing it unthinkingly. A basic rule of thumb is that you should always – ALWAYS – know how much money is in your accounts. Even if you’re dreading looking at your bank statement or opening your mobile banking app, do it. What’s more, do it every day, and actively participate in figuring out where your money is going each week. Use finance apps, get a professional advisor, or do whatever you need to do to track that money.
Your household budget should be the governing force in your marital finances.
Your household budget, whatever that may look like for you, should be the governing force in your marital finances. Create it, stick to it, learn it, live it, and love it. Budget for expenses, for spending, for saving and investing, even emergencies. With a set budget in mind, you won't be surprised or overwhelmed when it comes to paying bills, grocery shopping, or any other expenses along the way.
4. Whose Insurance Will You Use?
One of the many benefits of marriage is being able to be added to your spouse's insurance through their employer. This is especially helpful if one spouse is an entrepreneur or works part-time and doesn't qualify for insurance through their employer. Or maybe your husband's policy is just way nicer than yours.
Either way, you should discuss how you plan on handling medical insurance once you're married. Keep in mind that, usually, you'll need to be added to their plan within 30 days of your wedding in order for it to be considered a QLE (Qualifying Life Event) exception. This allows you to be added onto their insurance without having to wait for the usually once-a-year open enrollment period.
You will also want to consider which insurance is best for adding on children if you're planning on getting pregnant in the near future. Some plans are much more affordable for families, so do your research to figure out which option is best.
5. Set Your Financial Goals (Short-Term and Long-Term).
Have a discussion about both your short-term and long-term financial goals. For example, what do you want to by one year from now, versus five years, versus 10-20 years down the line? I know your twenties seems early to be thinking about retirement, but compound interest is powerful, and the sooner you start saving, the better.
You'll also want to discuss life goals like having children, buying a house, or choosing to be a stay-at-home mom. No one wants to have their baby and then find out, oops, their spouse wasn't actually happy with supporting them staying home with their infant. You definitely need to discuss these major life choices before getting married – because if you don't agree, your marriage may suffer the consequences.
6. Make a Plan for Your Debt.
Between college loans and credit cards, it'd be a miracle to find someone headed into marriage who isn't in a little bit of debt. So how much debt are you willing to handle? You and your fiancé should discuss exactly how much money you owe, to whom, and when it needs to paid off by. By marrying them, you could be on the hook financially for their debts. Don't take on a burden you're not willing to bear.
Don't take on a burden you're not willing to bear.
A prenup can protect you against debt your fiancé accrued before your marriage. While it may not be the most romantic idea, at least you can have peace of mind that you won't be expected to inherit debt in the process of a divorce. If your partner is resistant to the concept of a prenup, think of it this way: The state you're married in already has laws regarding how assets and alimony are dispersed in the event of a divorce. So, without a prenup, you're basically agreeing to the terms of the marriage established in your state. A prenup simply allows you to choose the terms of your marriage yourself. Plus, if you plan well and keep your marriage loving and happy, you'll never have to worry about it.
Actively Talk about Money and Don't Be Afraid To Ask for Help
Why talking about money is so stigmatized, I’m not really sure. But talking about it, and what’s more, listening to your spouse’s financial goals, dreams, bad habits, and good habits is an excellent way to build your finances together and create the household you both want.
Don’t avoid the uncomfortable, touchy subjects. The only way out of a big problem is through it, and avoiding hard conversations might be indicative of the amount of trust you have in your partner, which is to say, not much. If you’re concerned that they’re spending too much, or even that your budget could be adjusted, talk about it. Money, like any potentially controversial topic in marriage, is absolutely something you need to be on the same team for – or else.
Don’t wait for things to go from bad to worse. If you’re drowning, you wouldn’t ask for a life raft after you’re already underwater. The same applies here: Don’t wait until the circumstances are dire to turn to professionals and ask for their help.
Asking for help means you care about your marriage enough to seek aid from someone wiser.
Asking for help in any situation can be hard, but all it means is that you care about your marriage enough to ask someone wiser and with more knowledge and experience to help you out. Again, finances can be extremely stressful in a marriage if both parties are going in opposite directions. Whether it’s taking classes or workshops, reading books, getting a financial advisor or retirement manager, ask for help when you need it and even before you need it.
Marital finances don’t have to be the chore we think they are. If anything, building your life together, including your future, is really exciting, and it can be fun to think about and prepare for. Like any topic, knowing where your partner stands and communicating with them is the best way to ensure a smooth road without any bumps.
Remember you’re not by yourself anymore when it comes to facing finances. You have someone in your corner to help you succeed and cheer you on, and combining finances with the person you love, respect, and trust most in the world is the exciting start to a future with endless possibilities.
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