Too many couples don’t discuss money in-depth before getting married. Making a large joint purchase together, like a car or house, might be the first time they discuss every aspect of their finances. For couples, it’s extremely important to discuss things like financial goals, financial habits, credit history, credit scores, personal history with money and more.
Yes, it can be uncomfortable initially, especially if you have never discussed money like that before. However, the reality is that money is a vital part of a marriage, so it needs to be discussed with open communication.
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Once you’re married, it’s still important to keep open communication about money. Some couples like to have regular “money dates,” where they set time on their calendars to sit down and discuss money together. These money dates can happen monthly or quarterly. They are a great chance for the couple to discuss their progress toward their goals, recent spending habits, changes in finances or feelings around money.
Deciding whether to have joint, separate or both kinds of accounts is a decision that should be discussed together before getting married. No matter which a couple may choose, it is essential to have clear communication, boundaries, rules and expectations regarding how finances will be handled.
Joint Accounts
Some couples have joint accounts, where everything is shared as a family. This can be difficult in the case of divorce, especially when one person earns significantly more than the other, has debt while the other doesn’t or has differences in personal spending habits.
However, it is possible, and documenting pre-marital finances in a prenuptial agreement might help.
Separate Accounts
Other couples want to keep all finances separate. They maintain all separate accounts.
The couple will still need to decide how to pay for joint costs, like housing. If the couple is raising children, it can be challenging to keep all finances completely separate. However, this method is still possible if both parties feel the costs are split fairly.
Both
It is becoming more popular for couples to use a combo method, where some finances are kept separate and others are shared jointly. Each individual may have their own account, but they also have a shared account. They may use their separate accounts for personal spending and shared accounts for joint costs, like housing, food, childcare, etc.
There are many different ways to handle this, whether each person contributes the same percent of their income or each person contributes the same dollar amount.
“If you choose to get married without a prenuptial agreement, and you have a balance in your 401(k), 403(b) or TSP, make sure to save all monthly statements since your date of marriage,” Itkin said. “In California, if you don’t have proof of the pre-marital balance and the investment growth on that pre-marital balance, you may be forced to give 50% of your retirement account to your spouse, as it will be treated as community property. State laws vary on this issue.”
Don’t Compromise Your Career
This is a lesson that is more common for women getting married, though it’s a consideration for men, too. Many women give up their careers to let the other person build theirs. Not only will you lose wages during that time, but you may also lose upward mobility, promotions and 401(k) contributions. Even if you receive spousal support in a divorce, you may be unable to make up for these losses.
This is easier said than done, especially when a couple is raising children. It is a decision both partners must make together while thinking about themselves and their needs.
“While it might be nice to have one parent stay home to raise the children, my recommendation is for that parent to get back into the workforce as soon as possible,” said Itkin. “It is a rude wake-up call to be in your 40s/50s/60s, facing divorce, and realizing that your earning potential is limited, since you have been out of the workforce for decades. Child support goes away when kids grow up and alimony/maintenance/spousal support is rarely paid forever.”
Pay Attention to the Emotional Side of Money
Money is highly emotional. Everyone has a different relationship with money, which has been shaped by their childhood, their parents, events in their lives, culture and other factors. It is important for a couple to acknowledge this and make sure that they understand their partner’s relationship with money.
Speaking openly and listening kindly can help you both navigate the emotional side of money together as a married couple.
The Bottom Line
Marriage is hard work, but very few people go into it wanting to divorce. And, like it or not, money is a key aspect of a marriage. To try to avoid divorce, you can learn from other couples’ costly divorces: Discuss money before getting married, decide whether to have joint or separate accounts, don’t compromise on your career and pay attention to the emotional side of money.
