Talk the Talk Before You Walk the Walk
Don't let your "over the moon" feeling toward your future spouse cloud your view of reality. There are some scary statistics out there pertaining to marriage and money. According to the University of Virginia's The State of Our Unions report, the average first-time marrying couple today has a 40 percent to 50 percent chance of divorce over their lifetime. But couples who make enough money -- over $50,000 per year -- are 30 percent less likely to call it quits. Interesting enough, income was the largest determining factor on the report's list; it had even more of an impact on divorce rates than whether or not a couple have lived together or share the same religious affiliation.
Your relationship can prevail even if you don't make a mint -- but you'll have to work as a team to pull it off. Researchers speculate that lower-income couples are more likely to separate not because of their low-income, but because of the stress and money-related fighting that often comes with not having enough to go around.
So, to avoid future fights, be sure to have the following five conversations about financial matters before you walk down the aisle:
1. How Your Parents Dealt with Money
You may expect your future wife to take on the bulk of child rearing responsibilities because your mom did, or you may assume your soon-to-be husband will take care of the yard work because that was your dad's job. These assumptions trickle into finances. If you grew up in a household where money was managed strictly, you may be more of a tightwad than your fiancée, who grew up in a home where spending was liberal.
You'll also need to discuss how material matters affected your childhood. Many young adults have difficulty transitioning from their parents' upper-middle-class home to a life of ramen and beans as they start a career. Others who come from relatively poor backgrounds may have trouble letting go and spending money, even when it's readily available. How different were your backgrounds, and how will that affect the expectations you both have as you build a life together?
2. Share Your Current Debt and Credit Status
All too many young people marry an individual with a mysterious financial situation. Don't be afraid to ask questions. It's better to find out the details now. Maybe you know your boyfriend has a good job and makes decent money, but do you know if he's over his head in debt? You don't necessarily need to go through each other's spending line-by-line (though that's not a terrible idea) but you should at least pull credit reports to share before you get married.
Even if major debt isn't a deal breaker for you, it's essential that you know exactly what you're getting into when you marry someone else. When you combine your financial accounts and start making major purchases together, you will be taking on the other person's financial reputation.
3. How You'll Deal with Combining Your Finances
You're more likely to trust your spouse financially and to work together as a team on your money if your finances are combined once you're married.
This should include checking accounts, expenses, and budgets. But how you'll do this may look different from the next couple. For instance, some couples do a complete joining of finances right away. But others will maintain separate checking accounts, to which they'll transfer a set amount of money each month as spending money. Either way, it's important to make these decisions before you actually combine your finances.
4. Define Your Financial Goals
When it comes to finances, you and your future spouse may have completely different goals. Maybe your future wife dreams of one day being a stay-at-home mom, even if it means living on a shoestring budget, while you dream of the kind of financial success that allows you to travel every year. If you have the right financial plan, both of those dreams could be possible, but you need to be on the same page to get there.
To start, you should define what "financial success" means, whether that means retiring early, buying a vacation home, paying for your children's college, or becoming debt free. If you don't have the exact same goals, which you probably won't, figure out where to compromise and how to work toward both of your goals simultaneously.
5. Decide Who Will Deal with Everyday Spending and Budgeting
Finally, before you combine your finances, take the time to figure out who will take the lead on managing them. For convenience sake, usually one person deals more closely with paying bills, managing the budget, and staying on top of the checking account balance.
Oftentimes, this can be a point of contention in a marriage. The spouse who doesn't manage the money may feel that the other spouse has too much financial control. Or the spouse who does manage the money could feel overwhelmed with the responsibility. Even if you decide now who will take on which roles, it's important to continue to communicate about everyday finance and budgeting decisions, and make sure neither of you feels unfairly burdened or out of the loop.
Money isn't everything, especially when it comes to your relationship. But learning how to communicate and work together on financial issues will help you communicate and work together in other areas of your relationship. When you're on the same page financially before you're even married, you'll build a stronger foundation for your life together.
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