Talking Your Way Down the Aisle
The importance of having money discussions before you tie the knot.Kathy Longo, CFP®, CAP®, CDFA Thursday, 31 January 2019
Love is exciting. The first date jitters, the honeymoon phase, ring shopping etc. Wedding planning, while often stressful and expensive, is all about planning a life together. We love love. What we don't love, as evidenced in various TV shows and movies, is talking about what happens after the happily ever after, which often involves money. Whether you come in with a lot or too little, there are hurdles. The dreaded prenup. The horror stories of partners carrying huge amounts of undisclosed debt. The reality is, in most aspects of our lives, we avoid having difficult financial conversations until we have to. Waiting until things hit the fan, unfortunately, takes away a lot of options. It is in these situations when couples are forced to be reactive instead of proactive.
You need to have money conversations as your relationship moves to the next level. Considering 35% of couples report that money is one of the leading causes of conflict and a whopping 47% report that they have different saving/spending habits than their partners.[i] Even more sobering is that 1 in 5 Americans have made a purchase over $500 without notifying their spouse and 7.2 million Americans have hidden a bank or credit card account from their spouse.[ii] Add to that, based on age and socioeconomics, 40-50% of married couples get divorced[iii], and you can see why it is so important to deal with potential issues before the horses have all gotten out of the barn.
We know you want to just run off and have your love story and that an article like this is like a pin to a balloon. But from a different perspective, laying all your cards on the table up front and expecting your future spouse to do the same, takes a lot of unwanted surprises out of the situation. Money values differ for everyone and are built from each person’s personal experiences with money from youth to adulthood. No two people, even in the same family, will have identical money values. When nearly half of all couples report having different money styles, you can see why having some hard talks early on may help ease the path ahead.
Communication is Key
Schedule a time, ideally when there isn't anything pressing going on, perhaps outside or someplace calming, or home on a lazy day, and lay it all out there for each other. It's important to schedule this talk so no one feels ambushed. It's important to create a safe and honest atmosphere and to commit to full disclosure. This is the time to talk about everything, what you have, what you owe, what you want down the line. If one of you comes in with premarital debt, for example, your spouse wouldn't be on the hook for that per se[iv], but it could cause problems financing a house for example, or they could lose shared investments down the line. Whether it's coming into a relationship with a lot of money--like a sizeable trust fund--or a lot of debt--from student loans perhaps; the more you know about each other, the more you can realistically plan what type of life you want and can afford to have.
Goals, Values, and Long-Term Planning
The big money talks do not need to be all horror and revelation. Communicating openly and frankly, with practice, can make your relationship stronger. Take the time to share your long-term goals, where and how you want to retire for example. If you want children, discuss how your career may change, what type of schooling, where you'd want to live, etc. If saving has always been challenging, but your partner excels at it, this could be the space to talk about that. If large debts may come before large investments or purchases, this gives space to problem solve on how best to handle them. Understanding how your spouse feels about money, how they like to live, and what is important to them will give you a fuller understanding of the person you want to spend your life with.
Conversations about insurance, wills, long-term health, familial obligations (like being in charge of parents’ care etc.) all can and should exist in this space.
- Come to agreements about saving and spending and write them down.
- Determine what insurances you need or what needs to be changed in the policies you both have.
- Discuss family health history as it can play a role in the financial choices you make.
- Be really honest and open.
- Talk about a prenuptial agreement.
A prenup can be a good tool, we don't get car insurance because we want to get in an accident, we get it to protect ourselves. Treating a prenup in a similar vein, where discussions of divisions of assets in case of divorce, when you are in a good place, may take some of the heartaches out of the process down the line. Marriage, while romantic, is also a legal and business partnership. Treating talk of money, budget and long-term goals as part of the partnership and not some taboo topic will make your relationship stronger.
Good news is that younger generations are on the right track, in fact, the divorce rate dropped 18% from 2008 to 2016.[v] One reason for that is Millennials, who get married, tend to have more education, more stable careers and are marrying later in life. Millennials and Gen Xers, coming into marriages older, more established and with more assets, also may be more practical in getting married.[vi] Having open conversations about money, even quarterly ‘check-ins' to look over savings, investments, retirement accounts, debt, and long-term plans may help to demystify and destress. Remembering that you and your partner are a team, on the same side, and not opposing forces is important as well. If you or your spouse are compelled to put secret money aside, for example, it behooves you both to have a real conversation about why. No matter what, the first step will always be communication. The more you talk, the more you learn about each other, and the more likely you will be to stay on the same page, and team, to reach your goals.
About the Author
Kathy Longo, CFP®, CAP®, CDFA
Kathy Longo brings over 25 years of expertise and experience to Flourish Wealth Management. Kathy is wholly dedicated to improving the life of each client and finds joy in making complex matters simple and easy to understand. She excels at asking the right questions, uncovering new possibilities and implementing the most advantageous strategies for success. Playing such a pivotal role in her clients’ lives remains an honor and a privilege. After earning a degree in Financial Planning and Counseling from Purdue University, she began her career at a small firm in Palatine, Illinois where she worked directly with clients while learning to build a viable, client-centric business. Over the years, she gained extensive knowledge and wisdom working as a wealth manager, financial planner, firm manager and business owner at notable, various sized companies in both Chicago and Minneapolis.