If you’re either married or planning on saying your vows in the near future, one of the most important things you can do is discuss finances. Unfortunately, money is one of the leading causes of divorce, so the topic definitely deserves some of your attention before you head down the aisle – or shortly thereafter. Although it may not sound glamorous or romantic, money is sure to play a role in the long-term success of your union. If you address things openly, honestly, and most importantly jointly, your finances can improve, as can your relationship. Read on for some pointers.
1. Choose Joint or Separate Bank Accounts
Don’t automatically assume that you should merge your finances if you’re about to get married or have been married for a while. If keeping them separate works, leave well enough alone. It may make sense if you are a spender and your partner is a saver, as this may remove some disagreements from the equation. Another option is to semi-merge your finances so that there’s one joint account for monthly bills and both partners also maintain separate accounts for personal purchases. The most important thing is to look at things objectively, discuss them openly, and come up with the best strategy for your personal situation.
2. Create a Joint Budget Together
What you can definitely do together is create a joint budget. Add up your incomes and write that sum on one side of a page. Then, write all monthly expenses on the other. Don’t forget to include annual expenses such as property taxes and auto insurance premiums, including a prorated monthly amount for each. Jointly establish a limit for entertainment, and remember that your ultimate goal is to make sure what’s going out of your household on a monthly basis is less than what’s coming in. If that’s not currently happening, investigate ways to reduce your monthly expenses such as cable TV, cell phone, and Internet. Less expensive options are always available – it just may take some research and sacrifice.
3. Rotate Roles
It’s advisable to put one person in charge of paying all monthly bills to eliminate confusion and avoid missing due dates. However, that’s not to say that this should be set in stone. Every few months, reverse roles and let the other spouse handle it. This is a great way to even up household responsibilities as well as to give both parties a more clear picture of joint household finances.
4. Set Goals
Set goals for the financial topics that are most important to you as a couple. If it’s credit card debt, decide how much you can afford to send in each month and create a time frame for when it can be paid off for good. If it’s retirement savings, use an online calculator or consult with a financial advisor for how much you should expect to need during your golden years. Then, adjust your savings goals going forward so you stay on track.
5. Treat Your Retirement Portfolios as One
This is a tough nut to crack but should not be taken lightly. Depending upon your age, if one spouse is heavily invested in stocks and not so much in bonds and the other spouse has a similar portfolio, some adjustments may be in order. Melding two portfolios together and viewing them as one is a challenge and you most certainly want to get the advice of a professional when you do so. Having a portfolio that’s invested prudently according to your age is a must to ensure your assets are protected as you get older.
6. Openly Communicate About Money and Finances
The best way to broach all of these topics is to schedule a few hours of uninterrupted time and have the money talk. It can consist of all of the above plus any other important financial topics in your marriage, such as saving for your child’s college tuition. Make sure both parties agree that no judging is allowed and that openness and frankness are encouraged. That’s the only way to come to true and meaningful agreements on your joint financial picture.
Once you’ve gotten all this on the table and come up with some parameters and guidelines, it’s time to start speaking up about things when your spouse missteps. Since you’ve had the openness and honesty to establish the ground rules, continue this moving forward. If one person makes a mistake it should be addressed immediately. Speaking about and acting on financial issues is one of the toughest things couples do in marriage, but if you can master it, you’re that much closer to having a long and happy union.
How do you think you can improve marital finances?