Before marriage, all kinds of lovely conversations ensue: How many kids? What should we name them, Jayden or Hayden or Payden? Where should we live, Paris or Wyoming or Sao Paolo? Beach house or woodsy cottage? Dog or cat?
In reality, the better questions might be: How much is in your 401K? or Your credit score is what?
While decidedly unsexy, it's the latter reality checks that ultimately impact a marriage the most -- just ask anyone a few years into marriage. The issues are less 'our goals aren't aligning' and more 'what was he thinking buying that TV?'
Over the past decade, the divorce rate in America has maintained at a sobering 50%, and the number one reason for divorce is still believed to be money. That's not surprising: according to a recent survey by the American Psychological Association, the number one source of stress for Americans, both male and female, is money.
Finances are the foundation for the life you're about to build with someone -- and no one should enter a marriage blindly without assessing whether this foundation is rocky or solid. Take some quiet moments to go through the following questions with your future spouse. Financial values and habits often align with bigger issues, so don't minimize problem areas -- and don't be surprised if these conversations end up being more interesting than you think.
1. What's your credit score?
Your credit score is your "financial responsibility" number -- and it impacts everything from your ability to open a line of credit to your mortgage interest rate. Carmen Wong Ulrich, personal finance expert and author of The Real Cost of Living, has seen a lot of women with good credit marry guys with bad credit -- to their detriment. "The 'why' is as important as the 'what' when it comes to money conversations," she advises. "If his credit is bad, ask him why." Was he unable to make payments because he overspent on that vacation, or got laid off? And don't just take your partner's word for it -- take a few minutes to check your scores together on AnnualCreditReport.com
2. Do you have any debt?
This is a corollary to the first question. Look out if there's a double whammy here -- bad credit and a lot of debt. Ask what kind of debt it is, as credit card debt from spendy living is different from student loan debt. On the other hand, debt is debt. Discuss whether you'll share the responsibility of paying off the debt, or whether it will remain with the person who brought it into the marriage.
3. How much do we have, and where is it?
It's surprising how many people don't know their net worth, but it's an important number to start with. Sit down and get a global picture of each other's assets. See where you stand, and where the money is located (in stocks, bonds, real estate, a car?) It's good to get a complete picture as a starting point to build from. An easy way to do this is via LearnVest.com's My Money Center where you can link up all your accounts to calculate your net worth.
4. Are you a saver or a spender?
You may already know this about your partner, but it's time to discuss this dynamic more openly. If you are a saver-saver couple, that bodes well for financial stability. If you are a spender-spender couple, there is probably harmony here, but you'll have to make sure you're earning more than enough to cover your lifestyle. More disagreements can arise with spender-saver couples, but there's no reason they can't work well together -- the saver can keep the family on a budget, the spender can help everyone enjoy the fruits of their labor. Also discuss what feelings are triggered when the other person is in saving/spending mode -- often the underlying feelings are more important than the actions.
5. Where do we want to be in 5 years? 10?
Talk about and set specific money goals together. A "comfortable" lifestyle might mean a $150,000 household income to one person, and $1 million to another. Discuss what kind of lifestyle you want, how many homes you want, how often you want to go on vacation, and then -- this is important -- crunch the numbers. Will you be able to afford this? If not, what adjustments will you make? (Check out LearnVest's Take Control Bootcamp, which features an interactive "What Will My Lifestyle Cost?" calculator.) You may have to adjust either your income, or your expectations.
6. Do we want kids, and if so, who will work?
Bottom line: Kids are expensive. Not only should you discuss how many you'd like to have, but you should discuss the work situation -- who will work and who will stay home? How will you share income and child-rearing responsibilities? Although it's never possible to predict the future 100 percent, making sentiments clear early on (i.e. if you plan to work and not be a stay-at-home mom) will prevent misunderstandings later. This may be one of the most important conversations you'll have, as a team mentality here can make life a lot easier. Lauren Lyons Cole, a Certified Financial Planner, also recommends discussing how you'll structure your retirement accounts, which have to be held individually -- like setting up a Spousal IRA for the stay-at-home spouse.
7. How will we share responsibilities?
There are several responsibilities when it comes to household finances: (1) earning (2) budgeting (3) saving and spending (4) administrative (paying bills, etc.). Talk about how you will split responsibilities, and who will tackle what based on strengths and inclinations. Will you focus on bringing money in? Will your partner scour for deals and help cut costs? Will you both sit down and create a budget once a year?
8. How will we have tough money conversations?
Unfortunately, according to CBS Moneywatch, 80 percent of people have lied to their spouse about spending money. Make a pact not to be one of those couples -- and talk about how you're going to, well, talk about money. Will you sit down and have a check-in twice a year? How will you handle it if one of you has bad news, or feels guilty about having bought something? What are your areas of sensitivity, and how should they be broached (i.e. don't talk to me about bills after work when I'm stressed)? Set some ground rules to make talking about money easier.
9. Should we sign a prenup?
Prenups are no longer as taboo as they used to be. In many cases, it makes sense to sign one, according to Sandra Schpoont, a New York matrimonial attorney, "particularly if you make considerably more than your partner, or your partner carries a lot of debt and you don't." At the very least, you and your partner should discuss what would happen financially in case your marriage were to dissolve, even if you don't sign a formal contract. These days, prenups shouldn't be seen as cold harbingers of divorce -- they can be tools for talking through important financial issues in case the worst happens. And ironically, talking through these issues can help shore your marriage for the better.
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These should be required before issuing marriage certificate.
My personal experience is that no matter how honest I am about my finances, after relationship becomes steady, women refuse to do math and expect way more than paycheck would permit. I am left wondering, why you came to me, when I already told you what I make? When I propose that we sit down do the math together to see if it is doable, it leads to drama like no one's business.
Credit card debt is different from student loans but not necessarily because of spendy living. Student loans cannot be discharged through bankruptcy. One should think long and hard before marrying it.
Do you know the interest rate on credit cards compared to student loans?
There are ways to defer student loans but there are no ways to defer credit card debt.
Live off your credit cards. Pay just enough to keep your credit score. Pour the money you save into the student loans. Then bankrupt out.
As I say, it is unethical, but let's be clear - no one is as unethical as the banks and credit card companies.
In fact, if we look at the results of surveys of divorced people conducted and analyzed by social scientists and reported in peer-reviewed scholarly journals, finances doesn't rank very highly, as a rule. The most commonly cited reasons are feeling unloved, feeling unappreciated, lacking communication, lacking a feeling of closeness and similar reasons.
It's worth noting that most divorces are initiated by wives for the psychological reasons cited above. If you are really concerned about divorce, I'd suggest finding some way to encourage wives to seek divorce less often. If the number of woman-initiated divorces dropped to the level of man-initiated divorces, the overall rate would drop from over 40 percent to about 20 percent. Something to consider.
I'm not saying money is never a factor in divorce, or that you shouldn't discuss it ahead of time, just that the evidence doesn't support it being the main factor in divorce.
Happy marriages not *lots* or marriages is the goal.
I think perhaps that the belief that "feeling loved is maybe the most wonderful thing in the world" is also behind women's remarkable propensity for divorce, despite the obvious harm it wreaks on children and former partners.
Apparently, tentatively, women feel so deeply that they must feel loved that they are willing to renounce their vows, have their life partners evicted from their homes and strip their children of the advantages of having a full-time live-in father in order to pursue their hopes of feeling loved. (That may not be it, since at least one study, which has been cited more than 100 times in other scholarly papers, found that the most important factor controlling who filed for divorce was the expectation of custody. But it's at least in the running as an explanation.)
That seems weird. The idea that all the vast harm wrought by divorce is primarily driven by women's wish to feel adequately loved is hard to encompass. Do they put the kids up for adoption if they feel the kids aren't measuring up? Do they put the dog to sleep if it pees on the floor one too many times? Do they go on welfare because they aren't happy about work? Not so much, I'm thinking. But if hubby doesn't make them feel loved, unleash the dogs of divorce. Hmm.