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The Most Important Thing to Do Before You Get Married (Have The Money Talk)

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If you're about to tie the knot, you've got plenty of things to plan for: the wedding, your honeymoon, and moving in together if you haven't already done so. Another thing that's not on every newlywed's radar, but also has to be planned for, is your financial future. The best way to decide how your new family is going to handle its finances is to have what's called the money talk. My ex-wife and I never took the time to figure things out up-front and we ended up calling it quits after less than four years. By taking the right steps, you can ensure that your marriage doesn't follow the same path. What gets said in the money talk varies depending on each couple's situation, but what doesn't vary is the fact that it's an important part of establishing an open and honest relationship with your partner.

What Is the Money Talk?
Before getting to what the money talk is, let's lay out what it is not. It's not a time to bash your loved one for dropping $100 on a night out with friends. It's not about limiting budgets or imposing regulations. Before you have your money talk, set a few ground rules. No judging, no raised voices, complete and total respect, honesty, and an openness to constructive criticism. Once that's done, schedule a time when you know you won't be interrupted. The iPhone gets turned off, the kids are taken care of, and you have ample time to seriously discuss money. Then, sit down and start to jointly map out a financial game plan that both and your spouse agree on and commit to. Here are a few specific subjects to address during your conversation.

1. Creating a Budget
A household budget may seem boring or unnecessary, but it's the only way to truly manage your finances effectively going forward. If the man of the house wants $100 a month to play golf -- and you can afford it -- then agree to it. If the lady of the house wants some entertainment dollars for a girls nights out, why not? As long as you're not in substantial debt and you're able to put money away for the future, grant each other those well-deserved leisure time expenses.

2. How Credit Card Debt Is Handled
Determine how much credit card debt you're currently in and decide what to do about it. If carrying a few thousand per month in credit card balances is fine with both parties, then agree on that. Just understand that the faster you get any debts paid off, the easier it is to manage your finances. If your goal is to pay your balances off completely, come up with a mutually agreed upon plan for how to make that happen.

3. Spending Limits
Do you like to take a lot of vacations? Is your spouse an antiques aficionado? If you have spending habits that could potentially tip into the extreme, it's essential that you set limits. If your finances are tight, set the bar low, and require that both parties agree on any purchases above it. Expensive personal purchases made without prior knowledge of the other spouse can easily lead to arguments. And hiding credit card statements or lying about purchases doesn't help the matter either. Have the money talk and you won't be tempted to do either.

4. Retirement Savings
Retirement savings is another great topic for the money talk, no matter how old you are. If you're young, you can take advantage of the power of compound interest by beginning to set funds aside now. Figure out where you both currently are with your retirement portfolios and use online calculators or consult with a financial advisor to figure out your current course. Once you have that information in-hand, create a joint investing plan going forward. Compare the asset allocation of both portfolios side-by-side and make sure you're not overly invested in any particular area, whether it's stocks, bonds, or international funds. Consider committing to invest all raises, bonuses, and other so-called "extra money" toward your retirement.

5. Bill Paying
If one of you is better with numbers and finance, that spouse should be in charge of paying the bills. That doesn't mean, however, that the other partner shouldn't be fully involved in the process. In fact, making it a joint routine can help teach your partner a crystal clear understanding of how your monthly finances work. Plus, it's a nice gesture to the person in charge of bill-paying to get a break once in a while. This was one thing that my wife and I got right.

Everyone has different views on money and it's rarely an easy thing to talk about, but don't let that get in the way of voicing your opinion. If you disagree on any particular financial strategy, the money talk is your chance to speak up. Not taking the opportunity to speak your mind can lead to heated arguments and serious marital discord. Once you get that first talk out of the way, plan for future conversations. Things change in a family's financial picture as time passes, especially right after you get married if you have an expensive wedding or honeymoon to pay off. Sit down and have the money talk with your future spouse soon and get your new relationship off on the right foot.

Have you had the money talk with your partner yet?