Marriage and Money

What to Discuss Before You Tie the Knot

Marriage and Money
March 7, 2014

“Love and marriage, love and marriage… go together like a horse and carriage.” Does this song remind you of Old Blue Eyes himself, or the 1980s and 1990s sitcom Married With Children, which used it as its theme song?

Either way, it’s a funny take on a very serious subject: marriage. Since the song was first recorded by Frank Sinatra back in 1955, the institution of marriage has taken a serious hit in the United States, with approximately half of all marriages now ending in divorce. Moreover, experts tell us that one of the leading causes of friction in many marriages is disagreement about how to manage money.

Engaged and newly married couples can take a giant step toward strengthening their marriages by talking openly and honestly with each other about money and finances. Ideally, these conversations should take place before couples walk down the aisle, or at least during the early months or years of a marriage. However, it’s never too late for any married couple to have a frank dialog about finances.

Here are four financial questions that you might want to ask each other during these conversations:

  1. "Do we need a prenuptial agreement?” This can be an extremely sensitive topic for engaged couples, but it’s one that should usually be discussed at some point before the wedding day. Then, if you and your intended decide against a prenup, at least you know this is a decision you consciously made after discussing it together.

    The importance of having a legally binding document in place to dictate the division of marital assets in a divorce often hinges on whether one spouse is bringing a much larger percentage of assets and/or earning power into the marriage than the other. If so, drafting a prenup might be a responsible step — even though neither of you intend to get divorced. If each of you has roughly equal assets entering the marriage and equal earning power going forward, drafting a prenup might not be as much of an issue.

  2. “How do we each feel about spending, saving and debt?” This question gets to the heart of each spouse’s core attitudes about money. Attitudes about spending, saving and debt are deeply ingrained in many people, often going all the way back to their childhood and how they were raised. They can be very hard to change — so the goal isn’t necessarily to try to ensure that both spouses feel the same way, but rather to understand how you both feel so you can make financial compromises with each other and try to avoid major conflicts.

    It’s critical that you both disclose any debt that you have coming into the marriage with each other. This includes all types of debt, whether credit cards, car loans, mortgages, student loans or anything else. Not doing so is extremely unfair to your partner — and could be the source of major financial conflict down the road.

  3. “Should we combine our financial accounts and assets or keep them separate?” There’s no right or wrong answer to this question for every couple. For simplicity’s sake, some couples prefer to consolidate their checking, savings and investment accounts into single joint accounts when they get married. Others, meanwhile, would rather keep their own accounts separate from their spouse, especially if both spouses are working.

    Even if a couple decides they prefer separate accounts, it normally makes sense to create a joint checking account that can be used to pay the mortgage, utilities, insurance and other household bills. This way, both spouses still get to make autonomous spending decisions about the money in their own accounts. This is often a good way to avoid arguments about how money is spent on incidental things like clothing and entertainment.

  4. “Will one of us assume primary responsibility for managing household finances? If so, whom?” In many marriages, one spouse has more financial acumen and/or interest than the other and is thus better suited to handle household financial chores and bill-paying tasks. This is usually OK, but with a caveat: The other spouse should not be completely in the dark about household finances and bill-payment. If the financially dominant spouse were to die or become incapacitated, it would be very difficult for the other spouse to assume these responsibilities.

    In addition, both spouses should have equal say in major financial decisions, like buying a home or other major purchases, and in the basic structure of the household budget. Otherwise, resentments can start to build up that lead to major conflicts later.

There’s no one-size-fits-all solution to financial issues when two lives become one. The most important thing is to start discussing money before it becomes too big of an issue.

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