In the midst of discussing cake flavors, picking dress colors, and considering honeymoon destinations, there’s one more conversation that couples need to have before their wedding day: the Money Talk.
Couples should be talking about money before getting married not only because it can help them avoid stress and arguments over finances in the future, but also because it’s simply one of the most important, and most overlooked, parts of the wedding planning process. Part of merging your life with another person means merging your finances, and the sooner a couple starts aligning their goals, the better.
Start with a frank discussion with your partner before combining your finances. This is a big conversation and it will be one of the largest indications of how you interact as a couple; the key is to make sure all major life issues have been addressed by asking plenty of questions, some broad and others specific. These questions will differ from couple to couple based on several factors, including age or whether this is a first or successive marriage for either party. But the goal is to identify what’s important to each partner both short- and long-term, be it money for travel, early retirement, or leaving an inheritance to children.
Moreover, ask yourselves what goals you share. For example, a couple hoping to start a family should address not just when they hope to conceive, but where they hope to live, and whether or not one parent will stay at home. If so, which parent? When will this transition take place?
Another aspect of shared finances that’s often overlook is the role of each person’s money personality. If one person is a saver and the other partner a spender, for instance, there are bound to be issues down the road; we don’t automatically change our habits post-marriage. The same is true if both parties are spenders.
That leads me to a final point that may seem more specific than the others, but in my years of experience, I’ve come to believe that there is no benefit to a couple opening a joint line of credit.
Every individual has their own credit profile, and when entering into a joint credit agreement, there is a primary and a secondary credit holder. Only the primary signer will build credit, or conversely, lose ground if the account falls behind. Instead, each partner should build their own credit in their own name and keep the lines separate, thus strengthening the couple’s overall financial picture.
When completed in earnest, pre-wedding financial planning can help couples steer clear of some of the most common financial – and emotional – issues faced in relationships today. Plus, the process is easily replicated from one life goal to the next, creating a road map that two people can continue to navigate together.
Cary Carbonaro, MBA, CFP®, Managing Director, United Capital of New York and New Jersey
This article is intended for informational purposes only. We recommend that you discuss these ideas with your tax adviser. United Capital does not offer tax or legal advice; therefore, this article should not be taken as such.