Once you’ve decided to tie the knot, discussions about money shouldn’t be far behind. You need to decide how to merge your money, what your common goals are, and so on. That will enable you to sail the waters of your relationship smoothly.
People generally feel uncomfortable talking about money, even with their significant others. To take some of the discomfort out of the situation, you may want to start out by first discussing how your parents handled money and how you feel about its role in your life. For some people, money symbolizes love or security; for others, it symbolizes power or control. It can be spent freely or hoarded and saved. Explore your feelings about money together. After you’ve had a few initial discussions about money in general, initiate a discussion about your respective financial situations. Figure out whether either of you have any of the following:
Get copies of your credit reports and go over them together. If your partner won’t talk about money with you, consider counseling. How can you work toward common goals if one of you can’t or won’t talk about money? It’s important to realize that each of you will probably have goals that the other doesn’t share. Acknowledge that they’re important too, and try to find a way to work toward these individual goals as well as those you have in common.
One of the most important things about money in a relationship is establishing common goals. Do you want to buy a house? Travel together? How will you save for the future? If you plan to have children (or already have them), what will you do about college funds? Once you talk these ideas out and come to agreed-upon conclusions, other money issues can become easier to deal with.
How will you handle your banking? Will you keep separate bank accounts and split the bills between you? Will you share a joint account that all of your income goes into and all of your bills are paid from? It’s very difficult to keep track of the transactions that two people make to a single bank account. Many couples find that a joint account for household expenses and individual accounts for each spouse’s personal spending works very well (“His,” “Hers,” and “Theirs”). It allows each of you to have discretionary money for personal expenditures.
Often there’s one person in a marriage who is more interested, motivated, or adept at paying the bills, balancing the checkbooks, tracking expenses and investments, and maintaining a budget. Talk about it. You may both quickly agree on the obvious choice for these tasks, or you may decide to share the responsibility. Regardless of who does what, sit down at least once a month and review your finances together.
Virtually all financial experts agree that after marriage you should maintain credit in your own name. Keep at least one credit card in your name only, and use it occasionally, but always pay off the balance each month. If you find yourself alone through death or divorce, you’ll have a solid credit history on your own plus immediate credit available. It can be difficult to obtain credit on your own if you don’t have a credit history that doesn’t include your spouse.
Prenuptial agreements are associated with the super-rich, but nearly everybody could benefit from one. These agreements designate how your assets and liabilities will be handled in the event of a divorce, but they can also be used to protect the interests of children from a previous marriage or spell out other important issues. If you plan to have children of your own, your agreement may contain arrangements for child support, education, or even religious upbringing.
Prenuptial agreements are appropriate for anyone who:
People in those financial situations would do well to draw up a prenuptial agreement. These agreements can be written after marriage (called postnuptial agreements), but they are usually much easier to work out ahead of time.
For a prenuptial agreement to be legally binding, each of you must have your own independent lawyer, and each must fully disclose all of your assets and liabilities.