Marriage and money
Don't avoid early conversations about money and finances.
The decision to get married can be one of the most exciting and important decisions you'll make during your lifetime. However, money in relationships is a tough subject for many people considering marriage. Arguments about money hamper many marriages and financial problems or disagreements are a leading cause of divorce.
It's important for partners to have frank discussions about finances, budgeting and their individual financial personality or feelings toward money. These conversations may be uncomfortable at first, but avoiding them could prove much more costly down the road. Below are a few things to consider in your premarital discussions.
Yours, mine and ours
Taking a look at the before and after picture of your finances may help bring some clarity and confidence to the conversation.
- Create and discuss a budget that includes both monthly and non-monthly expenses.
- Clarify what each person is bringing into the marriage, whether good or bad (salaries, savings, debt and spending habits).
- Talk about how each partner grew up with money. For many marriages, there is a direct correlation between spending habits and views of money.
Questions to ask:
- Will you keep a budget, and if so, what will it look like?
- Will you merge all your accounts, keep individual accounts or create a mix?
- How will you title the accounts?
- What are your short and long-term financial goals?
- Would a financial advisor or professional help?
- Do you each have a retirement plan?
Know your financial personality
Spenders and savers can peacefully coexist if you keep the lines of communication open. Understanding the psychology of spending money and why a person spends can help build good financial habits after you are married. Strive to understand what your partner splurges on impulsively, their attitude towards saving and investing, and what financial fears they may be trying to hide. Once you have a good understanding of each other's money values and habits you can better establish common financial goals.
Questions to ask each other:
- Does the higher earner get to spend more?
- Do you spend out of the joint account as long as there are sufficient funds?
- Do you have to answer to each other for expenses?
- Do personal expenses come out of a monthly allotment each one gets for these types of expenses?
- Is there a specific dollar amount that requires a discussion with your significant other prior to a large purchase?
Talk about debt
Debt is something that most people have, and nobody likes, but it's an unfortunate reality that needs to be dealt with. Understanding each other's debt stories, credit scores and credit history are important factors to consider before making future purchases together.
More money and marriage questions
- Do you want to get premarital counseling?
- Do you want a prenuptial agreement to contractually define what each partner's property rights are upon marriage dissolution, as well as how they will divide debts? If so, consult a qualified professional.
- What happens with any assets held that were the result of an inheritance?
- Who pays the bills, in what proportion are they paid and how?
- When do you want to retire and what does retirement mean to you?
- What will your estate plan look like?
- What is your risk tolerance and how will that affect your investment choices?
- Do you have enough insurance to provide a financial safety net should something happen to one of you?
- Whose health care and other work benefits better serve both of you?
- Do either of you expect to help support your parents financially as they age?
- Do you have similar aspirations for the kind of retirement you want?
Having a financial plan is always a good step for anyone looking to get married. A budgeting calculator may help you get a handle on where your money goes. And be sure to consider how you'll protect your income and property in your discussions. Be sure to check your insurance coverage and make changes where needed. Your State Farm® agent can answer your questions about life insurance, disability income insurance, and homeowners insurance or renters insurance.