In the spirit of Valentine’s Day, here’s some advice for all you lovebirds out there: Discuss money before you get married. While it won’t guarantee divorce, failing to talk about your finances before combining them is bound to cause problems.
To get an idea of how important it is to have conversations about money before tying the knot, we surveyed 1,061 married and divorced U.S. consumers ages 18 and older from Jan. 31 to Feb. 2, and those who didn’t talk about finances before the wedding were more likely to be divorced. While the sample isn’t nationally representative, it provides meaningful insight into the role of communication when trying to successfully manage a relationship and the money within it.
With the help of the National Association of Personal Finance Advisors, we put together some tips for transitioning from the “my money” to “our money” mindset.
It Will Come Up Eventually
Among the 526 divorced respondents to our survey, 45% said they didn’t go over money goals or challenges with their spouse before getting married. Specifically, 28% said they didn’t talk about it but should have, and 17% said it was fine because they figured it out once they were married. Only 19% said they discussed the topic often.
“The fear that keeps couples from talking about money is a fear of being judged,” said Alan Moore, founder of Serenity Financial Consulting in Milwaukee, in an email. “They don’t want their partner to know of their spending failures, lack of money savings habits, or propensity to buy things on credit cards. …. Whatever you do, don’t judge them for a past mistake — make a plan to move forward together.”
Things were a bit different among the married respondents: 27% said they talked often about money, and only 10% said they didn’t but should have. The percentages of people who said they discussed finances occasionally before marriage were closer: 34% among the divorced, 39% among the married.
Granted, money isn’t necessarily fun to talk about, but it does touch so many aspects of our lives. These may not be among your more enjoyable conversations — about 30% of married respondents said credit or debt issues sometimes bring stress to the relationship (10% said often, 37% said rarely and 23% said never) — but they still have to happen.
“It’s a huge deal,” said Trent Porter, founder of Priority Financial Planning in Denver. “People that communicate about money it seems to me are leaps and bounds ahead, not only financially but also with their relationship.”
The Love & Money Balancing Act
Personal finance is aptly named. Baring your financial soul can make you feel vulnerable, but your partner’s different opinions on money matters aren’t character judgments — you just need to figure out how to make your differences work, like anything else in your relationship.
Having clear expectations and communicating personal priorities will help you compromise and reach decisions both parties can appreciate and understand.
“it’s not changing one person or the other,” Porter said. “It’s understanding the other person.”
It helps to set aside time to sit down and go over the whole financial picture. Cheryl Sherrard of Clearview Wealth Management in Charlotte, N.C., listed in an email some discussion topics for couples considering marriage:
- The assets and debts each person brings to the table
- Personal spending habits
- Spending limits — for instance, discuss any purchases more than $100.
- Joint or separate accounts
- How to share or split up living expenses
- Attitude toward debt
While it’s a good idea to check your credit reports and credit scores even if you’re single, couples should go through this information together. If one of you has done this before, you can help your partner through the process. It’s easy — everyone is entitled to a free copy of an annual credit report from each of the major credit reporting agencies, and you can see two free credit scores that are updated monthly using Credit.com’s Credit Report Card.
No matter what stage of life you’re in when you get married, it’s better to address finances before you are legally bound.
“[It] leads to some tough conversations,” said Bonnie Sewell of American Capital Planning, in an email, “but much better to have them now before they seal the deal than to go forward and be frustrated by what could have been learned before.”
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