Talking about money might not be as fun as discussing the songs your reception band will play or the tropical location in which you'll be honeymooning, but it's truly one of the most important pre-wedding talks you'll have.
You're probably aware that finances are one of the issues married couples argue about the most. To make matters worse, these types of arguments have also been attributed as the leading cause of divorce in the United States. Like any issue in a relationship, the best course of action is to have an early discussion to get ahead of any potential problems before they arise. To help you get started, here are five money-related conversations to have with your future spouse before the big day:
Will we be combining assets?
Many couples will combine their checking, savings and investment accounts after the wedding. By doing so, the couple will have a much clearer view of their financial standing and be able to tackle major purchases as a team. For those who need a little time to ease into the "what's mine is yours" way of thinking, it's also perfectly acceptable to form one joint account while also keeping other separate accounts. Neither way is wrong, but a joint account can be very helpful, even if it's only for rent or mortgage payments. Sharing money helps couples work together to reach financial goals. It also helps build trust as both partners always have access to viewing bank account information.
Are we starting in debt?
Discovering that your spouse has debt that's been kept a secret is the equivalent of a nuclear bomb exploding on your marriage. Between credit cards, car payments and student debt, it's typical to have racked up some debt before purchasing a home. The key is to be completely honest with your partner about how much you owe and what the payment terms are. Credit is another issue to get out in the open. If one person has a poor credit score, for example, you may want to consider keeping certain things separate because mixing good and bad credit could end up adversely affecting your future joint borrowing opportunities.
What are our financial goals?
Do you want to vacation every summer? Buy a house within three years? Start a family within five? These are excellent goals to have, but also require some financial planning. Warren Buffet said it best: "Do not save what is left after spending, but spend what is left after saving." This statement is especially apt for newly married couples. No matter your income, you should set a detailed budget and savings plan and follow it monthly. If you don't currently have an easy way to manage your money, check out services like Quicken or Mint.com to help get organized.
Who will manage the budget?
This may seem simple, but it can become a very tricky issue. Managing a budget is a team effort, but it does take time. If one partner is more organized or has more time to keep tabs on the finances, he or she should take charge. Monthly discussions on spending habits, investments and upcoming expenses are also important.
Should we get a prenup?
The prenuptial agreement is one of the most dreaded topics engaged couples talk about before their wedding. While I've always felt slimy discussing them because the nature of the agreement implies that the marriage may not last, any lawyer will tell you that it's always in your best interest to protect yourself. A few valid reasons to consider a prenup are if one partner is bringing major debt into the relationship, if there's business ownership involved or if one partner brings a significant amount of wealth into the marriage. The decision is ultimately yours, and shouldn't be taken lightly.
It's important to have some of these tough conversations well in advance of your wedding day. Remember, honesty is always the best policy and marital finances are always a team effort. If you and your future spouse decide you need some help tackling these issues, the National Foundation for Credit Counseling is a great place to start.