Between popping the question and saying “I do,” you and your partner have plenty to plan. And while it’s not as fun as cake tasting, you’ll want to sit down together and discuss the expectations you have about your future finances. According to a survey offered by Psychology Today, 27 percent of respondents found money to be the biggest stressor in their marriage.1
Having hard, truthful discussions about money beforehand can help lay the foundation for an honest and open financial relationship later down the line. As you prepare to tie the knot, take these five financial considerations into account first.
Consideration #1: Your Financial Influences
At this point, you’re likely familiar with what your partner’s childhood was like. But one aspect of their past you may have yet to discuss? How finances were handled in their household.
Were their parents frugal, coupon-clipping savers? Or maybe they splurged on dinners out and shopping trips every weekend? Now’s the time to dig deep into how your partner’s parents may have shaped the way they think about money. With all expectations out on the table, you can begin from the ground up determining together how your future family will be handling your finances.
Consideration #2: Discuss Your Financial Triggers
Some people are stress-spenders, others spend when they’re bored. Many splurge when they feel social pressure to do so. Whatever it is that causes you to go over budget, it’s important to identify it and make your partner aware. Having your spouse as an accountability partner can really help both of you stay aware and on top of the poor spending habits either of you may have.
Consideration #3: Determine Joint or Separate Savings
One of the biggest financial decisions to make together is determining whether or not to combine your finances into a joint account, or keeping things separate. For example, if you both earn an income, you may decide to keep things separate in order to reserve your own discretionary income. On the other hand, you could find it useful to funnel a certain amount of your earnings into a joint account dedicated to paying off monthly bills like internet, a mortgage, car payments, etc.
If you do choose to combine your finances, this will make it even more critical to sit down and discuss your spending/saving strategies with one another.
Consideration #4: Decide Who Does What
Does one of you cook and the other cleans? Maybe somebody makes the bed and the other takes out the trash. Just as you’ve developed a chore system between the two of you, you’ll want to determine who plays what financial role. If one of you is more interested in the market, they could decide to take the lead on your portfolios. If one of you is more organized than the other, they could be in charge of paying the monthly bills. Either way, you’ll want to sit down and draw out a list of any and all financial tasks before determining who should do what moving forward.
Consideration #5: Talk About Taxes
While we tend to only think about taxes one time a year, you may want to get a jump on determining how you plan on filing next year. As a married couple, you’ll have several options including married filing jointly, married filing separately, choosing a head of household, etc. You may want to meet with your accountant early on to determine which filing strategy may be best for you. This could potentially influence other aspects of your finances, which is why it may be a good idea to determine your strategy early on.
Getting married is an exciting time, and the days after you both say “I do” will feel like a whirlwind. Before you tie the knot, sit down with your partner and have a serious discussion about your finances as a family moving forward. Getting organized now could save you time and headaches later down the line.
We are here to help you live life to the fullest by helping you plan for your future today. Please feel free to reach out to us today with your immediate questions or concerns. You can give us a call at 330-836-7000 to schedule an introductory conversation and we will begin helping you build a solid foundation for the future. You can also schedule an introductory conversation with us here.
Since 2004, TCM Wealth Advisors has been providing Fee-Only Fiduciary Advice to our clients in Northeast Ohio and all across the country.