When a couple is in love and contemplating marriage, financial matters are often far from their minds. Even so, it is important to address the role that money will play in the marriage, since financial woes can damage even the strongest relationship.
The time to deal with money matters is before the wedding, not after. Too many couples fail to talk seriously about money until after they are married, and that can lead to some unexpected and unpleasant surprises.
Couples are often surprised to find just how far apart they are on money matters. In many cases, one spouse is a dedicated saver, while the other is a dedicated spender.
This mismatch can obviously lead to problems down the line. Getting these important matters sorted out and coming to an agreement ahead of time is the best way to head off future problems.
For example, couples can agree that all purchases over a certain dollar amount be discussed in advance, while giving each other the freedom to make small indulgences from time to time. This can help reduce the financial strain on the marriage without the partners feeling deprived or resentful.
Talk About Finances Before Getting Married
Couples should also have a rough idea of where each partner stands financially before the marriage.
It's not necessary to go through each financial statement and bill line by line, but a basic understanding of financial condition is essential. This allows couples to identify potential trouble spots early and work on better financial habits as a couple.
Going over finances before the wedding also gives couples a chance to discuss investment strategies.
Every couple has both short- and long-term financial goals, but the partners may have very different ideas about how to reach them.
One person may wish to play it safe when it comes to investing, while the other partner may be comfortable taking on more risk. It is important to work out these differences and agree on a strategy that is acceptable to both partners.
That could mean separating investment money into separate pools, one for each partner. It could also mean discussing any financial moves ahead of time, or allocating some money for safe investments and other funds for longer-term growth opportunities.
It could even mean that one spouse takes the lead on investing while the other sits back and makes periodic recommendations. In any case, the key is to keep the lines of communication open and keep all investment decisions open and transparent.
After Marriage: Sharing Your Money
One of the hardest things for couples to do is allocate household expenses fairly when one partner makes significantly more money than the other.
That difference in earning power can seem insignificant at first, but as time goes on it can become a real problem, especially if the two partners also have different spending and saving habits.
Many couples feel that the fairest way to allocate household expenses is to simply split everything down the middle, but that allocation may not go over well with the lower-earning spouse.
One alternative couples can use is to allocate expenses based on a percentage basis instead.
For illustration purposes, consider a couple where one spouse earns $7,000 per month and the other earns $3,000 per month. In this case, the higher-earning spouse would pay 70 percent of the household expenses, with the other spouse picking up the remaining 30 percent.
That ensures that each spouse is contributing a commensurate share of their income to maintaining the household. This strategy can be debatable as well, but it often works out better than a straight 50/50 split.
The Bottom Line on Money and Marriage
Dealing with money is not easy for couples; nevertheless it is an important consideration. Financial problems are responsible for a large percentage of breakups and divorces, so getting this aspect before marriage is absolutely crucial.
Securities offered through Securities America, Inc., a Registered Broker/Dealer, Member FINRA/SIPC. Advisory services offered through Securities America Advisors, Inc., a SEC Registered Investment Advisory Firm, Pamela Sams, Investment Advisor Representative. Jackson Sams Wealth Strategies, Securities America and all other entities named are separate entities.
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