Premarital Financial Planning

In the 2012 study “Examining the Relationship Between Financial Issues and Divorce”, Kansas State University researcher Sonya Britt found that arguing about money is the top predictor of divorce. No matter if you’re 25 and newly engaged or 65 and making a second trip to the altar, it’s important to know about your beloved’s money makeup before tying the knot. That essential knowledge includes more than sharing credit reports; you should talk about money beliefs and more.

Unfortunately, many couples avoid having this conversation until the first bank overdraft, not the best time to learn about your mate’s online shopping habit. Couples planning to marry  should start discussing money at least six months before the wedding.

Here are some good icebreakers:

History What does money mean to you? What events helped shape these ideas and attitudes? What money lessons did you learn growing up? Who do you turn to for money advice?

Debt How do you feel about having debt? Have you ever defaulted on a loan? What’s your credit score? What do you use your credit card for? How much debt do you have right now?

Goals What are your financial goals? What is your timeline for reaching them? What are your career goals? What about non-financial goals?

Spending How do you decide to make a purchase? Do you have a budget? Do you keep track of your debit card purchases?

Saving How much have you saved? How do you decide how much to put into savings? When would you like to retire? Why?

Practical matters How much do you earn? What is your net worth? How will we make a joint budget? Who will balance the checkbook? How much should we each be able to spend without asking for “permission”?

Dreams What would you do if you inherited a million dollars?

Where you want to live, how many children, and even sex is usually a lot easier to discuss than the money talk. It’s kind of like approaching your parents to ask them if their wills are in order.

What you should aim for is an honest conversation, not a job interview, so use these questions as conversation material rather than openers. If you’re having trouble getting started, there’s an app for that! It’s a game called Money Habitudes that you can play online or with a deck of cards.

Another possibility is premarital financial counseling. If spending a few hundred dollars today saves you a few thousand in attorney fees later, it will be a great investment. (Note that if you are going into a second marriage and there are stepchildren involved, the scope of this conversation widens considerably.)

Remember – you’re not just marrying into each other’s families. You’re also uniting your assets. So is the best solution separate checking accounts? Not exactly but kind of. My vlog on Joint or Separate Checking Accounts discusses what we recommend.

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