10 Money Tips for Couples Before Marriage

Worried about fighting over money once you get married?  You’re not alone. A survey on couples and money released last November by Capital One pointed out that younger people (18-34) are more prone to conflicts with their partner about money: 36 percent disagree monthly (or more frequently) with their partner. Sixty-five percent of those between ages 18-24 and 41 percent of those between ages 25-34 report that they have argued about money during the last 12 months.

Money problems can certainly overwhelm a relationship, particularly a relationship on the verge of marriage. Here are 10 ways prepare yourself for a more solid money foundation before you get married:

1. Agree that money is something that should be talked about: Not every couple needs a set date and time for a monthly money meeting – though that might help a lot of people. The first discussion any couple should have about money should deal with whether they can talk about it. It might be worth discussing how each person’s parents dealt with money issues and whether those practices would be worth copying or avoiding. Most important, money problems will happen in relationships – it’s important to discuss how you want to handle disclosure and working things out.

2. Swap credit reports: Before discussing who will pay the energy bill, couples need to know if they can afford it. Individuals should check all three of their credit reports – from Experian, Trans Union and Equifax – on a staggered basis throughout the year to get an idea of debt amounts and to catch inaccuracies that might surface during the year. Ignore all the heavily advertised “free” credit report services and go to the Annual Credit Report site for credit reports that are actually free.

Swap reports when they arrive and check the other’s data for inaccuracies and changes from the previous reporting period that might signal an increase in borrowing or the possibility of identity theft. And again, make sure you talk about it.

3. Discuss all the past baggage: If couples have been previously married or in other live-in relationships, there might be expenses associated with kids to consider or previous debts and bankruptcies. If you’ve seen each other’s credit reports, that might also add a few topics for discussion. You’re not ready to handle money until you understand how both sides have handled it in the past. Talk about money priorities for the kids, and how one or both of you will extinguish debt.

4. Discuss money dreams: Part of the reason money discussions can be so stressful for couples is that most discussions focus on problems. Make sure you also discuss positive stuff – like how you’ll afford travel you both want to do, how and when you’ll be able to buy a house, future tuition dollars or how you’ll afford to start a family.

5. Build a first budget: If you’re moving in together, you need to create a budget. The first step is tracking current income and spending data for at least three months and making sure you’re noting important expenses coming up in the future. If you want help, it’s easy to get. A financial planning professional can help you measure where your money is currently going and where you might have opportunities for necessary spending or saving.

6. Decide how – or whether – you’ll merge your money: Being a couple means building shared financial connections. The extent of those connections is up to you. Talk about combined checking and savings accounts and access to each other’s investments.

Joint checking accounts have several advantages – they allow for simplified recordkeeping and greater transparency on what both sides are doing with money. Separate checking accounts allow for greater independence and individual responsibility over money.

7. Be very careful about joint credit: There was a time when women couldn’t easily get credit and were solely dependent on the credit history of their husbands while their men were alive – once the male spouse died, so did the wife’s credit opportunities. That changed with a broadening of lending law in the 1970s, and it’s particularly important that both partners establish credit in their own names with a good history of using that credit.

Surviving spouses have the freedom to establish credit, but without a solid history, it may be particularly tough to get credit at a time when they really need it. Also, surviving spouses have to pay off outstanding credit held jointly, so it’s critical to keep those accounts under control.

8. Consider  a prenuptial agreement: If one or both partners or potential spouses have sizable assets or particular priorities about allocating money for specific purposes, charities or family members, a prenuptial might be worth a discussion. A financial planning professional can work with tax, estate and matrimonial attorneys to work out that agreement in a way that’s advantageous to both sides.

9. Talk about long-term savings, investing and estate issues: Even couples who keep separate finances need to prepare their income and retirement plan together to maximize the money they’ve worked for. A financial planning professional can help couples sort through their goals and what it will take to get there and how a potential inheritance may affect these plans and potential estate issues.

10. Plan for the unexpected: Couples should begin building safety nets from the beginning. Building an emergency cash reserve fund to cover between three to six months of living expenses should be a first goal. Then, depending on living circumstances and whether children or significant assets are involved, couples should develop estate plans as early as possible including wills, powers of attorney and specific plans to pass or dispose of business assets.

A discussion about beneficiary designations on life insurance policies, 401(k) plans and IRAs is also a must. While worst-case scenarios don’t make for the most enjoyable conversations, these discussions are better done before death, illness or a financial emergency makes such plans essential.

These money tips for couples were produced in association with the Financial Planning Association (FPA), the leadership and advocacy organization connecting those who provide, support and benefit from professional financial planning.

For more tips on finances and marriage check out our Money & Marriage series, a Couples Guide to Managing Money and Finding Financial Bliss!

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