Although it may not be the most romantic conversation you’ll ever have, it is essential to talk about your finances before you walk down the aisle. Money troubles cause a lot of problems in many relationships and are, unfortunately, one of the leading causes of divorce. We think discussing the financial aspect of your relationship before it has the chance to create any tension in your marriage just might be the most important topic in our ten things to talk about before marriage series.
A survey conducted by American Express Financial Advisors revealed that 66 per cent of North Americans spend more time thinking about money and careers than they do about sex, health, or relationships. Basically, we spend 80 per cent of our waking hours earning money, spending money, or thinking about money.
Photo : Gucio Photography
Planning out your finances with your other half doesn’t have to be all doom and gloom. You can make it enjoyable – grab a bottle of wine at your favourite restaurant, armed with pens and a notepad, and work your way through the following important financial topics:
Talk about each of your salaries. You should know exactly how much each of you earns separately and combined to figure out what tax bracket you will be in. Discuss when your last pay increase was, and when you expect to receive your next one.
Talk about all your debt. Have mortgages, student loans, car loans or lines of credit? Now isn’t the time for secrets -it’s time to completely come clean about financial matters. If you have debt, tell your partner about it. Discuss how that debt will impact your finances for the next few years and how you can work together to manage and pay off the debt. Find out if you are behind on any payments and if you are, come up with a plan to get caught up.
Discuss your credit card habits. When do you use your credit cards? Do you pay the minimum amount each month, or pay it in full each month? Add up all the credit card debt you both have and devise a plan to pay that off. Set a date when you want to have that debt settled by.
Talk about all the accounts you have, including your precious savings. How many accounts do you have? Savings accounts, checking accounts? Talk about how much money is in each of them and what you’ve been saving it for. Decide if you should have a joint checking account or separate accounts or both.
Outline your income and spending patterns so you can create a budget. Agree on a realistic budget, don’t be stingy – a realistic budget is much more likely to be successful in long-term. Make plan to pay off debt that suit both of your needs. Do you have a monthly gym membership? Medical expenses? Think through the expenses you have, write them down and combine your lists. A lot of problems occur when one partner thinks the other should be more careful about spending.
According to Good Financial‘s post on, “How to Rock Your First Year of Marriage,” a common question is “Should I invest, or pay down my debt?” Usually, interest on debt is higher than on your investment. Plus debt is guaranteed, returns from your investment are not.
A great app to download is Mint; it taps into your online banking, breaks down your income and expenses, and from there creates a budget for you which is completely customisable. It also categorises all of your spending habits – gas, groceries, restaurants, fitness and so on, so you know exactly where your money is going and truly makes managing your money easy. If you and your partner have separate accounts, you can add more than one bank account to your Mint account, combining your finances. My husband and I tried it out this weekend at our annual goal planning day, and realised how much time it’s going to save us – instead of documenting all our expenses by hand, keeping receipts and using excel sheets, Mint takes care of it all for you.
Decide who is responsible. Who is going to be responsible for making sure that bills are paid on time and which accounts will be used to pay those bills? Some couples find it easier to assign one person to pay all the bills while other couples divide the responsibility. Some find the best way is to set-up automatic bill payments. There is no right or wrong answer when planning out your finances, finding out what works for you as a couple is the important part.
Plan out your financial goals. This is the fun part, where you get to decide together how you are going to spend your money. Do you plan on buying a car, going on an African safari, buying a house, having children, heading back to school, or making investments? Make sure you are both on the same page when it comes to deciding on goals. Have a conversation about how each of you sees your financial future and what you are willing to do to make it happen in the next year, five years and 10 years.
More questions to go over:
- Are you a saver or spender when it comes to money?
- Do you consider going to the movies and having a vacation every year a necessity or a luxury?
- Where does our money go?
- Do we agree on how to spend money?
- What is our future plan for purchasing a home? How soon?
- Do we both know where our important financial documents are located?
- Are we both satisfied about decisions about saving?
- Are major debts a problem? Who should have control over the money we have?
- Will we be donating to charity?