To help ensure a happy marriage, couples should discuss a plethora of issues before getting hitched. Money matters are certainly on that short list. Unfortunately, money issues are also on the list of frequently neglected and avoided topics for engaged couples. Not surprisingly, money issues are one of the leading causes of marital discord and divorce. Discussing money with a loved one makes most people uncomfortable, and in many families, talking about money is a taboo topic.
Merging your financial decisions and resources doesn’t have to be unpleasant and a source of stress. Even if you’re largely in agreement about your financial goals and strategies, managing as two is far different from managing as one. Here are my tips to prepare for marriage:
- Talk money before getting married. Many couples never talk about their financial and personal goals and expectations before marriage, and failing to do so breaks up way too many marriages. Finances are just one of the many issues you need to discuss. Ensuring that you know what you’re getting yourself into is a good way to minimize your chances for heartache. In addition to discussing the topics in the rest of this list, also discuss your feelings and goals pertaining to earning, spending, saving, and investing money. Ministers, priests, and rabbis sometimes offer premarital counseling to help bring issues and differences to the surface.
- Discuss merging finances versus maintaining separate accounts. I generally prefer that couples merge their finances. Marriage is a partnership, and you’re supposed to be on the same team. In some marriages, however, spouses may choose to keep some money separate so that they don’t feel their spouse’s scrutiny with regard to different spending preferences. Spouses who’ve been through divorce may choose to keep the assets they bring into the new marriage separate in order to protect their money in the event of another divorce. As long as you’re jointly accomplishing what you need to financially, some separation of money is okay. But for the health of your marriage, don’t hide money from each other, and if you’re the higher-income spouse, don’t assume power and control over your joint income.
- Understand and optimize your employer benefits. If one or both of you have access to a package of employee benefits through an employer, determine how best to make use of those benefits. Coordinating and using the best that each package has to offer is like getting a pay raise. If you both have access to health insurance, compare which of you has better benefits. Likewise, one of you may have a better retirement savings plan — one that matches and offers superior investment options. Unless you can afford to save the maximum through both your plans, saving more in the better plan increases your combined assets. (Note: If you’re concerned about what will happen if you save more in one of your retirement plans and then you divorce, in most states, the money is considered part of your joint assets to be divided equally.)
- Discuss life and disability insurance needs. If you and your spouse can make do without each other’s income, you may not need any income-protecting insurance. However, if, like many husbands and wives, you both depend on each other’s incomes, or if one of you depends fully or partly on the other’s income, you may each need long-term disability and term life insurance policies.
- Prepare updated wills. When you marry, you should make or update your wills. Having a will is potentially more valuable when you’re married, especially if you want to leave money to others in addition to your spouse, or if you have children for whom you need to name a guardian. .
- Review beneficiaries on investment and life insurance. With retirement accounts and life insurance policies, you name beneficiaries to whom the money or value in those accounts will go in the event of your passing. When you marry, you should review and reconsider your beneficiaries.
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