Marriage isn’t just a romantic relationship; it is also a fiscal one. You and your spouse will not only share a home, but likely a bank account and it’s no secret that money troubles can be one of the most formidable foes to a happy marriage. Being fiscally transparent and setting clear expectations up front can help you and your future spouse thrive both personally and financially long after your special day.
1. Debts and Outstanding Financial Obligations: Marriage legally binds each individual’s assets and debts together, so any outstanding financial obligations, especially debts, should be revealed up front. Nothing will ruin the “honeymoon period” like suddenly learning your partner’s monthly loan and consumer debt payments devour the majority of your income. Not only will surprise debt put a strain on your lifestyle, it can create trust issues in the relationship early on.
Other outstanding financial obligations, such as ongoing assistance to a family member, child support, or alimony from a previous marriage should also be discussed. If your spouse owns a business, a business valuation could provide some insight as to whether or not the business could become a financial liability in the near future.
2. Assets: For younger couples who haven’t had much time to save, discussing assets might be a relatively simple conversation, but for higher-income individuals and those with more mature finances, the conversation could become a bit more in-depth. A pre-nuptial agreement, or a legally binding, pre-determined division of assets, may even be on the table for couples who demonstrate a significant imbalance of wealth between them.
3. Credit: Whenever you and your spouse decide to apply for credit, open a joint bank account, or finance a car or home, each of your credit scores will be considered when the banks determine your interest rate. Your partner’s credit could negatively affect your borrowing and purchasing power as a couple. However, identifying the problem early on could allow you to begin paying down debts and establishing the best credit possible before the day comes when you want to apply for a mortgage or other major loan.
4. Money Philosophies: More often than not, financial discord in a marriage can be avoided if both partners are aware of and understand the other’s attitudes toward money. This can be especially beneficial for couples who grew up in financially dissimilar households and, therefore, carry different viewpoints regarding money. Discuss each of your views on spending and saving to gain a better perspective, identify where there may be disconnects, and devise a plan to come together before the tough issues arise.
5. Financial Goals: According to a recent study by The Ascent, roughly 1 in five Americans are not transparent with their partners when it comes to their finances, and more often than not, it’s because they don’t share the same financial goals. Establishing common financial goals can act as the glue that keeps you and your partner’s daily spending and savings habits aligned for the betterment of your future together.
Financial goals will range from weekly and monthly feats like bill paying and budgeting to long-term considerations like saving a down payment for a home, opening a 529 plan for your newborn, or saving for retirement. Identify your short and long-term goals in order of importance in order to decide which will take precedence now and in the future. Consult a trusted financial advisor to help you to prioritize and implement such goals.
Of course, your goals don’t have to be set in stone and should be adjusted as needed, especially if financial realities evolve due to job changes, raises, promotions, or time out of the workforce. Make a habit of checking in with one another every few months to track progress and re-adjust your plans as needed.
If you and your fiancé want to embark on your new marriage with your best financial foot forward, we at Harbor West Wealth Management would love to help you strategize and plan for prosperous future together. Contact us today for a complimentary consultation call to discuss how we can help you and your future spouse build a healthy relationship with money.
This information is provided for general purposes and is subject to change without notice. Every effort has been made to compile this material from reliable sources; however, no warranty can be made as to its accuracy or completeness. Before acting on any of the information, please consult your Financial Advisor for individual financial advice based on your personal circumstances. Neither Harbor West nor Geneos Wealth Management, Inc. provide tax or legal advice. Harbor West is a division of NorthEast Community Bank. Securities and advisory Services offered through Geneos Wealth Management, Inc. FINRA/SIPC Investment Advisory and Financial Planning Services offered through Geneos Wealth Management, Inc. Investments are not FDIC Insured. Investments are not deposits of the financial institution and are not guaranteed by the financial institution. Investments are subject to risks including loss of principal.