Financial Topics to Discuss Before Getting Married
There are a lot of things you need to say to someone before you say, “I do.” So here’s a list of several talking points that will help strengthen your relationship and make you both have a better financial foundation for the future.
Marriage is single-handedly the most adult decision I have made in my life, despite the fact that I’ve supposedly been an adult for quite some time now. The decision to contractually and legally bind my life, my future, my family, and – most notably – my finances with another human isn’t something to take lightly. Of course, there’s plenty of advice out there for people in my engaged situation. In fact, I’m quickly learning that pretty much everyone has an opinion about marriage. And it can get overwhelming if you try and listen to all of it.
Instead, I’ve tried to focus my research on the most intimidating and often stressful part of getting married – the finances. As lucky as we are to live in a culture that allows marriage to be chosen for love, there is a very pragmatic element to signing contracts with another person. I could easily love and spend my life with the man I’m going to marry without actually marrying him. But, becoming contractually obligated to him is like any other investment. There are, of course, some personal risks and a ton of possible rewards. But one of the ways to mitigate (or at least better understand) those risks is to sit down with your spouse-to-be and get honest and clear about your attitudes towards money.
Whether you’re currently engaged, plan on getting engaged, or just hope to someday get married, here are a few starting points for important financial discussions you should have with your partner to help strengthen the foundations of your present and future relationship.
The biggest financial juggernaut looming over you and your future spouse is likely the very ceremony that will unite you. Before you ever get started planning, you should sit down and discuss how you both want to go about bringing this partnership into a legal reality. If you always wanted to throw a huge party for hundreds of friends and family while your significant other wanted to quietly sign some papers in front of a couple witnesses at a courthouse, you’re going to have some serious discussions on your hands.
Craft a Budget
Even if you two agree on what you want for a ceremony style and a proposed budget for the big day, you’ll need to figure out where every dollar will be allotted. You’ll need to have an action plan in place not only for how you’re going to acquire those funds, but also what happens if (as is likely) you accidentally go over what you expected.
Even though it’s not exactly the most romantic discussion you’ll ever have with your beloved, it’s necessary and practical to discuss whether or not you want to sign a prenuptial agreement. If neither party has any significant individual assets to protect, simply having a discussion about the current health of your debt, your investments, and your bank account could help you get on the same page without having to actually sign any paperwork.
What's a Prenup?
A prenuptial agreement is simply a legal document that describes how a couple will divvy up property and support one another in the event of divorce or breakup.
Because you’re about to be in complete partnership with another person, you should have a complete understanding about everything that could affect your relationship down the road. Of course, you don’t need to know every single detail about every element of your partner’s previous personal life (let them off the hook a little!). But if there are assets, payments, bad credit histories, or financial investments that they’ve been making or have made in the past, you need to put all of that out in the open.
A Little Advice (and Encouragement)
Even if you’re the one with what you feel like might be a game-changing financial “secret,” it’s much better to discuss it before marriage than once you’re contractually tied to another person. It’s often not a make-or-break discussion, either. Your partner already loves and wants to support you, but they can’t do it if you’re holding back pertinent information about some aspect of your life.
One of the biggest benefits of at least discussion a prenuptial agreement is understanding the amount of debt that you or your partner are bringing into your marriage. If you help pay off a huge chunk of your partner’s credit card debt, that’s money that – no matter what the future of your relationship maybe – you will never see again. Make sure you’re clear on how debt may be paid off and how comfortable you may be accruing it. Moreover, understanding how or why your partner has accrued the amount of debt they may have is important for your own future.
Do It For Your Future
Without an action plan to rid yourself of it, debt can become detrimental to your ability to make future investments and be a huge source of tension and stress in any relationship.
Speaking of investments, it’s helpful to know where your partner stands in their personal financial portfolio. When I first met my now-fiance, I had cultivated a blissful ignorance about my own finances. I knew how to get by, but didn’t have a lot of interest or understanding of anything that wasn’t an immediate future investment. He introduced me to his financial advisor. And, since we’d soon be making joint decisions about larger investments, we decided to work with the same person. Since I’m still new to the world of investments and life insurance and bonds and all that jazz, my portfolio isn’t the strongest. But, getting an honest assessment of my own financial situation was extremely empowering and allowed me to better understand action items I can do to improve it. That understanding allows me to be a more valuable financial partner for our shared investments in the future.
Knowing what your significant other wants from this life is extremely valuable information to help you support them – and visa versa. Talking to your loved one about what your personal goals are, your lifestyle expectations, and your future hopes will help you two better understand how to take those personal goals and transform them into shared dreams. If home ownership is extremely important to your fiance but something you care nothing about, you need to figure that situation out before you say, “I do.”
Short-Term Versus Long-Term
Break those goals up into short term and long term items. Really, it'll help...
What are you and your partner’s goals before you walk down the aisle? What do you want immediately after? How do you want to set up your new life together? What action items can you begin to do today that will help you both create that reality? Knowing these answers and the responses you both have to the short-term future for you will help you get on the same page as you begin your life together.
Because you’re going to likely say some variation of “til death do us part,” you get the excitement of weaving exciting future dreams with another person. You get to plan a life together. And setting 5, 10, and even 15 year goals for your partnership can not only be fun, it can keep you focused as life begins to throw both of you all the crazy curveballs it has in store.
Similar to a discussion about goals, one of the biggest investment decisions couples can make is whether or not you want to expand your family. The most obvious talk to have with you partner about this is, of course, if it’s in the cards for you two or not. But beyond that, many major financial decisions – like living in a certain city or purchasing a certain home – are greatly affected by offspring. How many do you want? When do you want to start a family? How will you take care of their basic needs, their daily care, their health, and their education?
The discussion doesn’t have to be stressful – plenty of people have been figuring out these decisions for a very long time. But it will be even less stressful if you figure it out before you have to figure something out.
Shared Accounts, Separate Accounts, or a Hybrid
When you and your partner met, you had separate bank accounts and completely individual finances. As your lives continue to intertwine, those separate bank accounts will inevitably start to meld more into each other. And as you begin to bring in community funds to pay for community foundations, you’ll need an action plan in place. It will become almost inevitable that, at some point, you’ll have at least one joint account. But how much money goes into that account, how it is maintained, what the money is spent on, etc, needs to be talked about. No matter what your preference or comfort, it simply needs to be understood and agreed upon by both parties.
At this point, if you’ve had all or at least some of these discussions with your significant other, you should already be pretty comfortable with where they decide to put their money. It can be helpful to, even if it’s a while before you actually need to, have an outline of what exactly you’ll both be wanting and willing to spend your money on in the future. If you don’t already have a grasp on your own personal budget, you’ll want to better understand that so you can have a healthier approach to a combined partnership budget.
The discussion of what you care about most and where you want to focus your time and money can piggyback with many of the other discussions you’ve already had (or hopefully will have in the future) with your partner. It’s important to keep in mind, too, that when it comes to being in a partnership, it’s not just about what you want and making the other person understand that your needs come first. You have to prioritize the things that are most important to you and be willing to understand and compromise on the things that may be important to your partner.
No matter how meticulous you are at planning and investing, something will go wrong. Though you won’t know what may go down or when it may go down, you should always having something saved in a collective piggy bank to help your partner in a tough situation – and visa versa (especially helpful if you have a mutual piggy bank to pull from). And before you ever need to dip into this investment fund, you’ll want to get on the same page about what exactly constitutes an “emergency.” If your favorite band announced a farewell tour, is that a reason to dip into the funds? Maybe. Or it could be the beginning of an avoidable argument.
There’s no right or wrong as long as you both communicate, understand, and agree.
Now that you’ve got a healthy assessment about your partner’s finances, approaches, goals, and everything else, you’ve already done future selves a major favor. One last suggestion for retaining the open communication lines you’ve set up is to schedule in ongoing money talks and check ins. Your lives and goals and priorities and finances will inevitably change as you grow together. So taking regular time – whatever that means to you both – to check in and continue to chat about your statuses and financial health while being open to change will strengthen not only your relationship, but every element of your financial foundation.