Congratulations! You found your soulmate. You know deep down that this is the person that you want to spend the rest of your life with. So in between dreaming, you ought to plan what that future will look like.
Money issues are one of the major causes of stress in a marriage. Before you get married, you and your fiancée should agree to sit down to talk about money. But what are the personal finance questions fiancées should discuss before tying the knot? What questions are fair and how do you start?
A great way to open the conversation may be to talk about “money scripts” — unconscious beliefs that may be rooted in early childhood experience. While most of these experiences are completely benign, there are times when they trigger painful memories.
The easiest way to uncover these money scripts is to simply ask your partner to tell you about their very earliest memory of money. Mine was at the checkout counter in the grocery store. I noticed that the TV Guide was for sale for 15 cents. I asked my Mom why anyone would pay for a TV Guide when we had one come to the house every week in the mail for free. Mom then explained that we actually did pay for it via a subscription. Decades later, the lesson I never forgot was that “there ain’t no free lunch.”
Sharing memories can lead into a broader discussion about the financial aspects of life goals, both long and short term. For example:
- Where would you like to live, both geographically and residentially (house, condo, apartment, ranch, RV, etc.)?
- Do you wish to have children? How many?
- Would you anticipate your children going to private or public schools?
- Do you expect both of you to work, or just one of you?
- What kind of wedding do you desire and how much do you expect to pay for it?
- What are your expectations about experiences, including vacations?
Just the Facts
Some of your questions ought to be in the “Just the Facts” category. For example:
- What is your credit score?
- How much debt do you currently have?
- What is your income?
- What percentage are you saving?
- How much do you currently have in savings and retirement plans?
- Are you financially responsible for anyone else?
Some describe marriage as a merger, so it would be helpful to decide beforehand:
- Will you have joint bank and investment accounts, separate accounts or a combination of both?
- How will you divide your financial responsibilities?
- Who will pay the household bills?
- How often will you meet to review the family finances?
- What kind of spending independence do you each desire?
- Are you comfortable managing your own finances or should you search for a CERTIFIED FINANCIAL PLANNER™ professional to assist you?
Stages of Life
Marriages take place at all stages of life. The nuances of first-time marriages in one’s 20s are going to be different than, for example, second marriages in the 50s or senior marriages in their 80s.
In later marriages, fiancées often have increased clarity about their parents’ finances and eventual inheritance. That generates a whole new set of questions. If, for example, one set of parents are well-off and the other set struggles, couples should discuss upfront how they view that imbalance.
While the issue of having and raising children may not be an issue for later marriages, how to treat children from multiple marriages certainly ought to be addressed. Couples will want to gain clarity on how they wish their estates to be distributed. Would the new marriage include both community and separate property?
- How would you feel about a pre-nuptial agreement to clearly identify separate property and the eventual distribution of that property?
- If they both agree to move into spouse A’s home, how would they feel about a co-habitation agreement? Such an agreement would enable surviving spouse B to be able to continue to live there but pass the proceeds of an eventual sale to the spouse A’s children.
- Upon the eventual death of the first spouse, what assets, including the house, should go to the surviving spouse vs. the children?
While you don’t want to avoid these conversations, you’ll want to remember that you are having them with someone you love. As you enter these conversations, remember to take it slow, be curious and suspend judgement. Know you will not always agree. Set aside the time to have deeper, candid conversations. Work toward honesty and transparency. Don’t be disappointed if you don’t always agree; you won’t. Instead your goal should be to ask each other questions to achieve mutual understanding before you tie the knot.
These conversations may be difficult. A money coach, therapist or CFP® professional may be able to help facilitate your discussion and help you find common ground, if needed. Visit letsmakeaplan.org to get started.