Photo (cc) by pengrin™
If you’re heading down the aisle, we have some scary statistics for you. Nearly 30 percent of married couples say money is the No. 1 source of stress in their relationship, according to a study by American Express, and money issues are largely blamed as a top cause of divorce by many experts.
How do you avoid the strain? In the video below, Money Talks News founder Stacy Johnson explains how to get on the same financial track as your partner before you wed. Check it out, then read on for more tips and details.
Now, let’s expand on Stacy’s pre-wedding advice.
1. Look for red flags
Look for thoughts or actions on your partner’s part that may not mesh well with your own. Does your partner make big purchases on payday rather than put money in a savings account? Does he forget to pay the bills on time? Everyone makes money mistakes, but a pattern of behavior isn’t going to change just because you tie the knot. Pay attention, and talk about your concerns.
2. Discuss your money habits
Only 43 percent of couples talk about money before marriage, according to American Express. That’s sad, because talking openly about finances is one of the best things you can do for your relationship and future married life. Set a time to sit down and have that discussion. Here’s some fodder for that conversation:
- How do you view money? Some people see money as a means to reach goals. Other people see it as a way to pay the bills and have a good time. You’ll want to be on the same page with this one.
- What debts do you have? You don’t want to find out your partner has a huge load of debt after the wedding ceremony. Perhaps they’re student loans or maybe the result of childish irresponsibility. What is your partner’s plan to pay them off? Is that plan realistic?
- What is your credit score? It might feel strange to ask, but you should know your partner’s credit score. If you plan to buy a house, take on new joint credit cards, or get other loans together, a bad credit score will mean you pay higher interest rates.
- What are your future money plans? Do you plan on making a big purchase soon? Do you have other savings goals? Are you serious about setting aside money for retirement? How much have you saved?
3. Set goals
Merging lives and money means merging goals. Before you get married, you and your partner should come up with a few financial goals you both want to achieve. Some things to consider:
- What are our goals? Whether you want to buy a house, save for retirement, get a new car, or take a two-week vacation every year, having mutual goals keeps you working together and gives you both something to look forward to.
- What’s the time frame? You’ve both figured out you want to buy your own home. But what if you want a house in the next year and your future spouse is fine with making the move in, perhaps, five years? Agreeing on a timetable has obvious benefits.
- What is my part? Set clear actions for both parties to reach your goals. For example, if you make more money than your partner, maybe you’ll feel comfortable contributing more to your goals.
4. Make a plan
Sixty-six percent of survey respondents told American Express they share all monthly expenses, and 34 percent divide up their monthly bills based on factors like income. How do you plan to pay the bills?
Before you say “I do,” set up a household budget and decide who will pay for what. Deciding what is fair in your relationship ahead of time will cut down on arguments and stress later on.
5. Take a test-drive with your wedding plans
Remember when Monica and Chandler got married on “Friends”? Monica thought her parents would pay for her huge dream wedding, but when they didn’t, we found out Chandler had enough money in savings to cover the expense. By today’s standards that would be $28,427 on average, according to The Knot. In the end, Monica and Chandler decided to scale back and save some of that money for their future goals – a true sign of financial compatibility.
Consider the wedding as a way to test-drive managing money with your future spouse. Keep your partner involved in the planning and make big and small purchases together. If you can learn to agree on costs, you’re well on your way to managing money as a couple.