Marriage and Money: What You Should Know NOW

Preventing financial obstacles to your future happiness starts well before 'I do'

Story by Aniela Whah

Getting married goes far beyond the bonding of two hearts. It's also the blending of salad bowls, bath mats and – as unromantic as it sounds – bank accounts and debts. Of course, the "money talk" means your relationship is really serious, and it can be a difficult thing to bring up to your partner as you begin to plan your future together. Many couples tend to avoid the subject altogether (especially if he has spotless credit and you are shouldering a $70,000 school loan).

Sure, no one likes to talk about money, but consider this: Money is the No. 1 reason couples fight and is a leading cause of divorce. In fact, a study by Utah State University found that couples who fight about money once a week are 30 percent more likely to divorce than their non-finance-feuding counterparts. Mary Ann Mattingly, an Anchorage-based licensed professional counselor, says that, given those statistics, it's worth investing the time in discussing money before you get married.

I love you… now let's talk money

Have you had the 'money talk'? Before you walk down the aisle, having a discussion about your personal finances can help ensure a future of wedded bliss, with minimal disagreements over money. Here are some conversation points.

What to discuss?

What kind of debt do you have? (Student loans, credit cards, car loans, etc.)

What kind of assets do you hold? (Savings accounts, retirement plans, etc.)

How much do you make? What does your future salary look like?

When do you plan to buy a house?

How many kids do you want to have?

What are your saving and spending habits? Who's the frugal one? Who's the spender? How much do you expect to save a month? What is the spending limit before consulting with the other on a purchase?

Will you combine your money, or keep it separate?

Will you have one checkbook, or two?

Will you combine auto insurance coverage (which may help lower rates)?

Who is responsible for paying the bills?

Do you want a pre-nuptial agreement?

How will finances for children from previous relationships be handled?

Do you have a will? If so, what are the terms of the will?

Do you have life insurance?

Will you change the beneficiaries on retirement and life insurance policies once you marry?

Who will provide health benefits?

Do you want to obtain insurance for your engagement and wedding rings?

"Marriage is a business partnership as much as it is a partnership of the heart," explains Mattingly. She says expecting that things will just work themselves out is a mistake. That's where "the talk" comes in. Couples should lay out their goals, expectations and preconceived notions about family finances before they get married. Open communication and an honest assessment early on will help set the stage for a fulfilling marriage spent reaching shared goals and achieving shared dreams. (See sidebar for discussion topics.)

Lessons from your Youth

How you were raised in regards to money often impacts how you perceive money as an adult. Were your parents spenders or savers? If you and your partner were raised differently, those differences add up and should be discussed. James Wolf, a financial advisor in five states, including Alaska, says that's why "open, honest discussion about money is key to keeping finances out of the argument routine." He says young couples should also be careful about another inadvertent lesson they may have learned from their parents: their lifestyle and spending habits. Many young couples just starting out have high expectations about their lifestyles. They expect to live at, or above, the standard of their parents' home. Wolf warns that living beyond your means leads to a lifetime of debt.

Budgeting for the Big Day

A simple budget can preempt a load of stress, especially when planning a wedding. It also adds a measure of accountability by making couples actually determine where they are spending their money. As a couple, saving together for that special day "is a great test of their commitment to each other and to their budget," says Wolf. "If you can't trust each other before you are married, how can you trust each other after, especially when it comes to money?"

Anchorage couple Clarice and Richard started saving for their big day 15 months in advance. They're saving money now by making sacrifices to their usual spending habits. For Clarice, that means no online shopping. "I have agreed to go on a 'no buy,' meaning I've cut my spending unless it's something we need."

Wolf suggests that if you use a credit card, you should keep track of all the daily or weekly spending. He says that way you'll always know how much you've spent. "If you both use the same card this is absolutely critical in preventing the end-of-month fear of opening your credit card bill."

If you are using a credit card, you should have enough money to pay it off every month. Wolf says paying off debt must be a priority. His strategy for those dealing with credit card and other kinds of debts: "Pay minimum payments on all except the highest interest rate debt – (on that) pay the most your budget will allow. When the highest is paid off use that amount plus the minimum payment from the next highest until all debt is reduced." The checks and cash you get from friends and family on your wedding day can also help pay down those debts.

If you don't know how to get started on a budget, seek out a professional. Many financial planners will offer free initial planning.

Who's the Boss?

Whose job is it to handle the family money? Decide which one of you will be responsible for paying the bills and taking care of other financial tasks. The best way to do this is by identifying each person's strengths and assigning tasks accordingly. Mattingly suggests that the couple should meet once a week to discuss the state of finances. Uttke says: "Our money is seen as whole rather than mine or yours." Murray's paycheck usually goes to pay the big bills. Hers goes to paying things like gas, groceries and day care for their toddler son.

Toasting the Future

When the wedding day rolls around and toasts are being made, the experts say you can safely toast your financial future if you've properly planned for it. Time and discipline are key to Wolf's approach. He reminds couples to pay themselves first, in the form of savings and retirement. He recommends putting five percent into savings, five percent into quality guarantee life insurance and another 10 percent into investing, such as a 401k or IRA. Wolf says, "A lifestyle of living below your means, eliminating debt and planning for the future will provide the retirement of your dreams. Retirement is living your life the way you want and getting paid." Wolf also suggests saving for emergencies to help avoid having to use credit cards in the first place. Five percent of each paycheck should go into an emergency fund. The experts say to save $1,000 for emergencies while you pay off debt. After you're debt free, plan to save three to six months' worth of living expenses. Once your emergency account is well-funded, you can begin saving in what Wolf calls a "pay cash" account for other things like new furniture, vacations or your wedding day.

Find It – Fund It!"

Mattingly says we should remember to be happy with what we have. She'd toast to mindfulness, saying: "Be mindful on the front end of the financial decisions (big or small) that you are making and how those decisions will or could impact you or your family in the long run." Budgeting before the wedding and financial planning for your life together is a great investment in your marriage.

Best wishes. Here's hoping that money never comes between you!