Getting married changes your financial life in profound ways. Financial advisors recommend that couples sit down to talk about financial planning. While the topic is not necessarily thrilling, it is a necessary premarital exercise for any couple since decisions that you and your partner make about how to handle money will have long-term repercussions for you as individuals, as a couple, and a family, even if you choose to combine your finances completely or keep certain things separate.
Your choices will not only have financial implications but also emotional and legal ones. A little preparation now will pay off later. Before you get married, you and your partner each must disclose your full financial circumstances to each other. Disclose all assets and liabilities, you should both also obtain your credit reports. Once you both know what you are dealing with, you can then decide how you will handle your finances in marriage. It is also advisable to obtain a prenuptial agreement.
Family financial goals
During this exercise, you may also want to create a household budget that will also help achieve the family’s financial goals. You may want to ask yourselves questions like:
What are your individual and family’s top priorities in life and how does money factor in those priorities.
If one or both of you have children from previous relationships, what kind of financial responsibilities do you have towards them?
Will you both be working or will one of you become a stay-at-home parent?
Long-term career or business aspects.
Are the extended family members financially dependent on you?
What portion of your income will you save towards a family account?
While you may not know all the answers to these questions, it’s helpful to get a sense of where your partner stands and evaluate what you each might need to think about or discuss further. What is important is to begin having this conversation before you say, “I do”.
Handling money after marriage
Marriage does not only provide emotional benefits but also financial ones. The financial benefits that come with marriage include shared living expenses which reduce individual costs. Given the shared costs, if you save your surplus, it can provide you with long-term financial stability. It is also often the case that a higher-income earning spouse contributes to the lower incoming spouse, because of these and many other financial benefits that come with marriage, each partner needs to be open and honest with their finances.
When it comes to sharing financial responsibilities, it is common for one partner in a marriage to handle the administration task of paying bills and all other financial obligations. It is however important that both partners are in the know and up to date with every financial obligation and how each of them is administered as there are dangers in a set-up where one partner is solely responsible. What happens if the responsible partner becomes sick to handle the responsibilities or is suddenly deceased?
Since many aspects of our lives are done online these days, one partner may not be aware of what accounts need to be paid and when, or worse, they may not know passwords to each account. It is therefore advisable that each partner has access to every account and knows what needs to be done. This joint approach to finances also makes it difficult for one partner to be irresponsible or hide financial matters for the other.
In a nutshell, marriage is not only about love and romance, on a deeper level, it is also a financial institution that should be run with due diligence. It is therefore important that partners are open, honest, and on the same page about their financial positions. The purpose of this conversation is to help you make an informed decision with your financial planning as a new family, if there are financial mistakes you have made in the past, it is important to be open at this stage. Having this conversation before marriage allows you to start your new family on the right foot and will ensure that there will be no ugly surprises waiting to potentially ruin the marriage over time.
