Though conflicts about money are the number-one cause of marital strife and, ultimately, divorce, marriage and money don't have to mix like oil and water. Consider these seven steps to achieving a healthy relationship between your marriage and your money.
- Learn each other's financial personalities. Everyone has certain financial inclinations that are part of their natural personality. Savers vs. spenders, debt attraction vs. debt aversion, and high-risk vs. low-risk (with regard to investing) are a few good examples.
If you're open and honest in your financial discussions, these will become apparent and you can go into your marriage aware of them and how they will impact financial decisions you make as a couple.
Often, conflicting financial personality traits-maybe you're a saver and she's a spender-serve a marriage well, as the extremes can help offset each other and make it easier to find a middle ground.
- Assign financial responsibilities. After you've talked openly and honestly about finances and gotten a good feel for each other's financial personalities, you should have an idea of which of you is best suited to handle specific financial responsibilities.
Sometimes, it's obvious that one partner is the perfect candidate to handle the bulk of the family financial tasks like bill paying, saving and investing, retirement planning, etc. Even then, though, experts stress that both partners should have a hand in family financial management.
For one thing, this will help prevent misunderstandings and arguments in the event of financial setbacks or crises (like a major expense or loss of money due to falling markets). Perhaps more importantly, this will make it less likely that one spouse has to pick up the financial pieces with little or no knowledge of the situation should his or her spouse become incapacitated or die unexpectedly.
- Discuss the merger and/or separation of finances. Obviously, you and your spouse will likely come into marriage with your own separate assets, be they checking, savings, investing, retirement or other accounts. The combining and/or separation of these assets can be one of the most touchy and sensitive areas of marriage and money.
There tend to be two schools of thought here: One is that the assets should remain mostly separate, with spouses continuing to fund their own accounts from their own earnings after marriage, and then split all living expenses either equally or proportionally (based on each spouse's income).
The other is that the assets should be merged together into joint accounts that are co-owned by the couple and used to pay living expenses and for savings and investments.
Each couple should decide for themselves which method will work best for them. Or, you can find a middle ground between these two options: creating a joint checking account to fund living expenses while maintaining separate savings and investing accounts, for example, or allowing each spouse to have a certain amount of "mad money" he or she can spend however he or she wants while all the other assets are combined in joint accounts.
- Deal with debt. If either you or your spouse will enter the marriage with substantial debt-whether it's credit cards, student or car loans, or even the cost of the wedding itself-it's important to share this with each other before you walk down the aisle.
Waiting until after you're married to tell your spouse that you're carrying thousands (or tens of thousands) of dollars in consumer debt is unfair, dishonest, and disrespectful. With all the debt cards laid out on the table, you can come up with a plan for dealing with it. In fact, paying down the debt as soon as possible could be one of the first financial goals you tackle together. Then agree on a philosophy for debt going forward in your marriage together.
For example, maybe you'll decide that consumer debt is completely off-limits, with the exception of a home mortgage and perhaps car payments. Or maybe you'll agree that using credit cards is OK, but you'll pay off the balance each month to avoid interest charges and revolving debt. The point is that, whatever you decide, you agree on it together.
- Create a budget.
It's important that you and your spouse sit down together and determine how much money comes in every month and how much goes out, and then devise a plan to ensure that there's more of the former than the latter.
The first step in budgeting for most people is what's sometimes called a NOW analysis, in which you distinguish between your Needs, Obligations and Wants.
- Be realistic. Many people enter marriage with rose-colored glasses, perhaps envisioning the financial stability and possessions of their parents and those they enjoyed growing up. What they don't necessarily understand is the years of hard work, planning and sacrifice their parents made to achieve that stability.
So don't expect to possess all the trappings of success right out of the gate – the big house in the suburbs, two fancy cars or lots of grown-up "toys." You may need to plan on renting a small apartment the first couple of years until you can save up for a down payment on a home, or driving a "beater" a few years longer if it still gets you from point A to point B.
- Get outside help. Finally, remember that you're not alone in this process of learning how to manage your money together. There are numerous resources available to help you, from countless books, DVDs, and seminars to your clergy (many churches offer pre-marital counseling that focuses on finances) and professional financial planners.