As you may have read in previous posts of mine, I’m getting married early next year, and wedding planning is on my mind. With the recent Supreme Court ruling, it looks like a lot more people may be getting married in the upcoming year, which means it’s time to talk married-people finances!
A recent CNN article noted that 43% of spouses have no idea how much their partner makes. As someone who’s probably way more into personal finance than the average person, this still blew my mind. I thought having financial conversations would be fairly normal in the typical marriage, but apparently I was wrong if almost 50% of couples don’t know how much their spouse makes.
With this in mind, here are some financial questions you and your future spouse should have before embarking on your lifelong journey together.
How Much Debt Do You Really Have?
Confession: I hate this question, mostly because I’m embarrassed by how much student loan debt I have. However, no matter how much I hate discussing it, talking about all of your debt with your future spouse is incredibly important.
Include all the debt you have, including:
- Student loans
- Car payments
- Credit card debt
- Any health-related debt (unpaid hospital bills)
After discussing all of your debt, talk about your plans for repaying it. In many cases, debt accumulated before you are married is your debt alone, and not the responsibility of your spouse. However, if your debt repayment is incredibly high, this will affect your joint ability to save and perhaps qualify for loans together in the future.
Make sure your future spouse has a repayment plan in place and, if they don’t, help them set up a budget to get the debt eliminated. This would be a great time to ask how much your spouse makes, if you don’t already know. Knowing this will go a long way in determining if your spouse’s repayment plan is attainable or not.
What Are Our Big Financial Goals?
Are you and your future spouse on the same page about buying a house, planning for children, and retirement? Yes, these goals may be far in the future, but if your spouse expects to quit working when you have children and you expected them to continue working, you both need to talk about it soon.
By getting on the same page with your timelines and goals, it will be easier for you and your spouse to agree on a long-term budget. After all, maybe it would make sense for your spouse to stay home while the children are young, given the exorbitant cost of childcare. On the other hand, you both may need to save more than expected or delay having children until you have sufficient savings to accomplish that goal.
Are You a Saver or a Spender?
No matter how many budgets you make, some spouses are just spenders. Unfortunately, I happen to fall into this category, so I know how hard it can be for the spender to rein in their natural impulses. However, spenders can control the majority of their impulses as long as they have an outlet every once in a while.
It’s important to ask this question after you’ve discussed your big financial goals. Spenders need to realize how their natural tendencies can derail financial plans and, if they’re involved in budgeting and planning for big financial goals, they’re more likely to control their impulses.
If you have a spender-spouse, it’s important they have an outlet with “fun money.” For my fiancé and me, this means I’m in charge of household purchases (pet food, household cleaning supplies) and presents (gift certificates, movie tickets). This question will lead you to the next on our list:
Are We Combining Our Bank Accounts or Keeping Them Separate?
This topic engenders a lot of conflict in the personal finance community, but there really is no one right answer for this. It’s up to you and your future spouse to determine if you want to keep everything entirely separate, combine everything, or do a hybrid between the two.
One thing you may want to consider is separate accounts for your “fun money.” Like I mentioned above, particularly if one person is a spender, consider an outlet for the spender in your life. You’ll want to agree on a certain amount of “fun money” ($200 a month, or 5% of take-home income) to set aside.
I know this may sound heretical to the savers out there, who abide by saving as much money as possible at all times, but trust me: if your future spouse is a spender, you’ll want to work together to provide an outlet. Even if that outlet is $20 a month, work together to find a reasonable solution.
Who Will Handle Everyday Spending, and Who Will Handle Investments?
If you decide on a joint account, this is the easiest way to handle everyday expenses. You both can have a debit or credit card (for rewards points!) and purchase household items as needed with this account.
Bill paying is a little trickier, even if you have a joint account, because someone will have to sit down and reconcile your finances. Even if you have auto-pay, you still will want to make sure your statements balance to receipts. If one of you likes this task more than the other, then the solution is simple. If both of you hate sitting down to pay bills, switch off monthly so that no one is “stuck” with that job.
The same goes with investments: discuss your risk tolerance and determine the best vehicles for your retirement savings, whether it’s company 401(k)s or investment with online brokerage firms.
No matter if you switch off or if one person is in charge, sit down together every few months to go over your expenses and savings. No spouse should be in the dark about finances and investments, and even if your spouse hates to talk about, make sure you sit down occasionally and go over everything together.
How Will We Handle Family Members?
You and your spouse should sit down now and discuss how you will handle needy family members. This could be a cousin who divorces a spouse, is now destitute, and needs a place to crash. Will you two host the cousin, or will you contribute money to get them on their feet? Talk now about what constitutes an emergency and what type of help you both feel comfortable giving.
Other family members aside, you or your spouse’s parents may need assistance as they grow older. While this is something you and your spouse should take up individually with your respective parents (and any siblings involved), talk to each other about your parents’ plans.
It’s better to know now if your wife made a pact to always take care of her mother. While there might not be any money involved, your wife may want to stay close to her mother, which could impact your moving plans.
By asking each other these 6 financial questions before getting married, you may save yourself from many headaches in the future. How you both address the money topic will speak volumes on how you communicate on other important life matters, so even if this topic makes your spouse squeamish, try to sit down and discuss these questions as early in the planning process as you can!
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What type of money questions did you have with your spouse before getting married? What questions do you recommend engaged couples (or dating couples) ask each other before getting married?