Congratulations! You’re engaged or maybe just married and you’re not sure how to handle the financial aspect of marriage. Here are some tips to make the process easier:
Discuss Your Money Past: Many of our habits and beliefs are tied to how we viewed money when growing up. Were you raised in a home that openly discussed money? Was money a taboo topic to discuss? Did you grow up in a more affluent neighborhood? Have you always been a big ‘save at all costs’ type? Or a ‘spend ‘til I die’? Do you plan to inherit money from your family? Some topics might not be a big deal to YOU, but might be for your spouse. Uncovering and having conversations around this aspect can help future money conversations.
Discuss your finances regularly: You deal with money everyday. Therefore you should discuss money on a regular basis. Going weeks or months without discussing your finances can have a negative impact on your relationship. Goals change. People change. You need to discuss your finances regularly in case anything changes.
Discuss your finances early: Sooner than later. Money problems tend to snowball if not discussed early enough. Easier said than done, but the longer you wait, the worse a situation can get. An untreated wound only gets worse. A more morbid analogy, but gets the point across.
Be open and honest: Obvious, right? Nobody likes a liar. The more open you are, the better able you can structure a successful money relationship with your significant other.
Get organized: This doesn’t mean you need to split all your finances 50/50. It does mean you should know about each others finances (eg, how much money do they have? Owe? Make? Spend?). This will shed light on any changes that need to be made.
Set Goals and create a plan: Buying a home? Saving for a vacation? Want to retire at 45? Sabbatical at age 40? Goals help align your money vision and help you both get on the same page. Sometimes something as simple as a cash flow spreadsheet (my favorite!) will help you get aligned and on the same page.
Estate Planning: Anytime a big life event happens, it’s best to make sure your estate plan is up to date. Update any beneficiaries, wills, or trusts to reflect your new family. This is the most commonly neglected part of any financial plan.
Life Insurance: Do you need additional life insurance? Term insurance is cheap and makes sense for the majority of people. When examining a plan, typically the most catastrophic financial thing that can happen with a married couple is the spouse suddenly passing away. The inherited assets aren’t enough to cover any financial obligations early on and life insurance helps with that burden.
Discuss using an advisor: Using an advisor can help you make better decisions and keep you on track. Newlyweds tend to have disagreements early on regarding money. An advisor can act as that unbiased third party to give their opinion on financial matters and keeps the conversation honest and productive.
The Paradigm Shift Takeaway
Discussing money is never easy early on in a relationship. Being open, honest, and organized early on in the marriage will help your money discussions. Stick to the above principles and you’ll be on your way to success!