While money is a leading cause of marital conflict, a recent study by Ameriprise found that nearly seven in ten couples report having good financial communication. Before wedding planning kicks into high gear, make conversations about your finances a priority. Taking the time today to talk about money matters can create a solid foundation for your collective future. Use the following six principles to guide your conversations about money:
1. Open minded. Take turns sharing your views on managing money as a married couple. Listen carefully to what your future spouse says is important to him. Recognize your differences and build on your strengths. If your expectations don’t match, try to find a compromise. Some couples avoid conversations about money to avoid feelings of hurt, fear, anger, or remorse. Creating a habit of regular communication can help you avoid heated arguments and can help ensure you’re on the same page financially before you walk down the aisle.
2. Honesty. Financial secrets can destroy trust. Share details of your financial history and current situation if you haven’t already. Your future spouse deserves to know if you’re paying off college debt or if you’ve made financial mistakes in the past (and how you fixed them). Also announce the good news. Disclose details about any savings you have set aside or a family trust that helps supplement your income so you both know where you stand.
3. Avant-garde. Once you have shared your current situation and history, discuss your goals for the future. Be open about your dreams, but be prepared to compromise. Although you don’t have to agree on everything, having common goals (buying a house, saving for college if you choose to have kids, retirement, etc.) allows you to combine your savings strengths and gives you a roadmap for your spending.
4. Cooperation. To avoid misunderstandings as newlyweds, discuss and assign responsibility for financial roles. Are any of you better at monitoring online accounts and paying bills? Are you both affiliated to a retirement account and make the most of employer contributions? Who will be the primary contact for your financial advisor, tax specialist or estate planner? Two is better than one when you’re able to divide and conquer financial tasks, but make sure you’re both on top of key decisions and financial matters.
5. Diligence. Once married, make updating your financial records a priority. It takes discipline, but taking care of those household chores immediately protects you in the event of the unexpected. Several steps to consider:
• Update financial accounts, insurance policies and credit cards with any name changes and, if necessary, add your spouse as the owner and beneficiary of these accounts.
• Consider consolidating your bank accounts if it suits your situation.
• Update or draft your will and estate plan to reflect your collective wishes.
• Change your tax deductions to ensure that the correct amount is deducted from your salary now that you are married. Consult your tax advisor before making any changes.
• Choose your health insurance. If both of your employers offer health insurance, carefully evaluate your coverage options and premiums to find the best fit.
Like most things worth doing, preparing for a life of financial compatibility takes work. If you and your future spouse can commit to the same monetary values, it can help you create a solid financial foundation.