Statistics say that the number one reason that marriages go downhill is money matters. Unfortunately, we’ve all probably seen this happen to a couple we know. The worst part about it is that it doesn’t have to be this way. Any financial planner in the world will tell you that most, if not all, arguments about money could be avoided if couples talked about financial matters before marriage.
Here are three key conversations to have before you say “I do.”
Are we combining finances?
Sharing isn’t easy. But as a married couple, it’s very wise to have at least one joint account. This account can be used for bills such as rent/mortgage, groceries, and utility bills. We recommend deciding on a percentage of your monthly income to put into the joint account while keeping the other half in your personal checking/savings. If the bride makes more than the groom, it’s OK for her to put more in per month and visa-versa.
How much should we be putting towards savings/retirement/emergencies?
With the uncertain economic climate, it’s never been more important to be thinking about the future at a young age. Most financial planners will tell you that you should be saving 10-30% from each paycheck towards some kind of investment. Another important number to remember is 3-6 months. This is the length of time you should have cash reserves for in case of emergencies. Now of course, every newlywed couple just isn’t going to have this amount to put away. We strongly recommend talking with your partner and deciding on an appropriate number.
We’re bringing some credit card debt into marriage, how do we handle this?
Many marriages have at least a little bit of credit card debt. This isn’t a showstopper, but it is important to be open and honest with your partner about any and all debt you’re bringing into the marriage. You should also acknowledge what bad spending habits you have and come up with a plan to fix them. There’s nothing wrong with spending money on entertainment or evenings out… but it’s key for the couple to have enough money to pay bills each month. Debt doesn’t go away, it only gets worse month after month. If solving these problems requires extra help, there’s nothing at all wrong with meeting with a financial planner who solves these problems for a profession.