Money is one of the leading causes of divorce in America. But it’s not shoe purchases that break a marriage, it’s a misalignment of attitudes about money. Having a conversation about money ─ not just about how much you have today, but about how you value it ─ is indeed the key to a long, happy union.
That doesn’t mean people with different definitions of reasonable shoe prices can’t be happily married. It does mean it might take a little extra work. It’s important to know about and work through these issues before you tie the knot. So as you sit down to have the money conversation with your future spouse, be open and honest. It’s not about who’s a spendthrift and who’s a penny pincher; it’s about seeing if you can work those differences out.
5 Key Items to Cover in the Talk
- Goals ─ Goal setting offers you a point of measurement to keep your financial plan on track; goals define where you are heading. So if your spouse has very different goals than you do, you’ll end up heading in different directions. Share with each other the financial goals you currently have set. Talk about the financial goals you envision setting once you’re married.
- Budget ─ Show each other your current budgets. You’ll get a view into each other’s philosophies about earning and spending, as well as an idea of where you both stand financially. Talk about how you’ll combine your incomes and your expenses into a single household budget. Talk the opportunity to draft a budget that you can both feel comfortable living by.
- Debt ─ Look at each other’s credit reports to see not only how much debt the other person has (and what kinds of debt it is), but also to see how responsible the other has been to date in paying down that debt. Just as you did with the budget, take each person’s debts and combine them, then make a plan for paying it off.
- Savings ─ Savings is one of the linchpins in a sound financial plan. So ask your future spouse about his/her savings. Does he/she have three to six months of living expense tucked away in an easily accessible rainy day fund? Is he/she saving for any particular future goal ─ like a special trip or a new car? How much has he/she already saved for retirement? Combine your income and your expenses and determine how much you as a couple will likely need for retirement; then make a plan for how you’ll save accordingly.
- The big day ─ In 2012, the average wedding cost $28,500. Traditionally, the bride’s parents footed the bill, but it is increasingly common for the bride and groom together to pay for some or all of their own wedding. If that’s the case for you, think about the value of a big, fancy wedding, and think about the other ways you could use the money. Come to a mutual consensus about a realistic budget for your wedding and stick to it, just as you do your day-to-day budget.
Please call if you’d like to talk about this topic in more detail.
Copyright © Integrated Concepts 2012. Some articles in this newsletter were prepared by Integrated Concepts, a separate, nonaffiliated business entity. This newsletter intends to offer factual and up-to-date information on the subjects discussed, but should not be regarded as a complete analysis of these subjects. The appropriate professional advisers should be consulted before implementing any options presented. No party assumes liability for any loss or damage resulting from errors or omissions or reliance on or use of this material.