Marriage and talking about money
Whether you’ve been married a long time, newlywed, or engaged and planning a wedding, talking about money is essential. There are so many things to think about when you’re just married or about to be, and no one would rate finances as the most exciting. Studies show that money (not relatives) is the number one reason couples argue. Those financial arguments (again, not relatives) are one of the top predictors of divorce. Marriage and talking about money do not have to be the cause of your arguments.
So, how can you avoid becoming a statistic? Here are some tips.
Talk To Each Other
A National Foundation for Credit Counseling poll found that 68% of engaged couples held a negative attitude about discussing money. 45% considered it “necessary but awkward,” while 7% said it was “likely to lead to a fight.” Five percent said it would cause them to call off the wedding.
The result? Couples don’t talk about finances. A Fidelity survey said more than one-third don’t even know their partner’s salary. The irony is that 72% of those couples said they communicate “very well” about financial matters.
It’s not surprising when you think about it. What’s romantic or sexy about debt, budgets, taxes, wills, and the like? But, while there isn’t a plan to keep every newly married couple happy, experts agree: Don’t wait to talk about money.
For example, taxes are boring (and scary), but they may be necessary right now. If you and your spouse are employed, the “marriage penalty” may force you to pay more taxes when married than when you were single. So, think about marrying in January rather than December. But if one spouse earns most of the money, you’ll enjoy a “marriage bonus” and pay less than two singles; a December wedding might be wise in that scenario.
Speaking about money now is important, but so is how. A 2004 study by SmartMoney found that more than 70% of couples talk about money at least weekly. So what’s the problem? “Most of us don’t know how to talk about money,” says Mary Claire Alvine, a certified financial planner. “People tend to be emotional and reactive, not strategic.”
Marriage and talking about money can be simple. Whether you talk about money weekly, monthly, or on some other schedule, what matters is that you agree on a system and stay open to changing it.
Get Started
Taking the first step can be difficult, so start easy with questions like “What’s your first money memory?” or “How did you spend your allowance?” Then move on to some of these:
- “Are you a spender or a saver?” – If one of you is a saver and the other a spender, create a budget that considers both styles. Studies show that men and women spend differently. Women often take care of daily expenses (groceries, utilities, clothes) while men make larger purchases, such as TVs, cars, or computers. The amounts might be the same, but the perceptions are very different. About 36% of partners don’t talk to each other about big purchases, which is a recipe for disaster.
- “Are you in debt?” – A TD Ameritrade survey found that 38% of couples were “only somewhat” or “not at all” aware of their partner’s debts. When you get married, your spouse’s debt doesn’t automatically become yours, but what he or she owes will affect both choices. For instance, heavy credit card debt could make it more challenging to buy a home. Make reducing debt a priority.
- “What are your financial goals?” or “Where do you want to be five or twenty years from now?” – People who identify specific goals make faster progress toward savings and investing targets. But first, you must agree on those targets: buying a home, starting a family, and being debt-free. List your individual goals, then share them and make a joint plan. Know what’s important to each of you. What do you value more, things you can keep or experiences to remember? Maybe one of you wants to buy a house while the other thinks saving for retirement is essential. Get these things out in the open early.
Trust Each Other
A recent Money survey revealed that couples who trust their partner with finances feel more secure, argue less, and have more fulfilling sex lives. That level of trust, though, isn’t typical among newlyweds. “We’re intimate with our partners in so many ways before marriage, and yet money remains off the table,” says Paula Levy, a marriage and family therapist.
Be honest. If you made a purchase you shouldn’t have, own up to it. Some 40% of men and women confess they’ve lied to their spouse about the price of something they bought, and lying about money can have huge repercussions.
Support each other. Retreating doesn’t help, and neither does finger-pointing. Work together to come up with a game plan.
You’re Still Individuals
Celebrate the differences. If your partner is a bargain-hunter, put him in charge of the spending while you invest the savings. And decide on a monthly amount each can spend, no questions asked. The average amount couples say this should be, according to Money, is $150.
There are pros and cons to opening a joint bank account. SmartMoney found that 64% of couples put all their money in joint accounts, while 14% kept everything separate. For many newlyweds, the ideal choice may be yours, mine, and our accounts. Once you’ve determined shared living expenses, you can contribute your portion of those costs to the joint account based on your share of household income.
Ask For Help
If you and your spouse find money conversations challenging, you might want to bring in a financial planner or other professional. Your credit union can help – that’s why they’re there. We offer free budget counseling to our members; check to see if your credit union offers this too. Marriage and talking about money do not have to cause stress. Take steps now to ensure that money won’t put rocks on your path to marital bliss.
