Marriage and Money

Marriage is for better or worse –it says it right there in the vows. No one gets married with expectations of bad things happening in their relationships or their lives. In the midst of a global pandemic that is wreaking havoc on people’s lives and economies around the world, however, some may look at the idea of getting married a bit differently.

            While getting married is a joyous occasion and offers the promise of shared life adventures and experiences, it also means joining your finances with another person who may or may not hold the same views as you do. Conversations about money may not be pleasant, but they are a necessary component of avoiding arguments about money down the road –one of the top reasons for divorce in the United States. Amidst such economic uncertainty, these conversations are now more important than ever.

Although the divorce rate in the U.S. has declined in recent years, 39% of marriages still end in divorce, according to Pew Research Center. With the coronavirus and the necessity for social distancing impacting people’s finances and our country’s economy, these are not the best of times. That doesn’t mean you shouldn’t get married. It does mean that it is more important than ever to have the tough conversations. You don’t want to find out later that your spouse has significant debt, especially when that debt could negatively impact your credit rating, your eligibility for a mortgage or loan, or the amount you could save for retirement.

A few things to consider regarding your finances prior to getting married:

  • Transparency is extremely important. Before tying your life to a partner financially, make sure the two of you are aware of the savings and debt each has and what kind of plans are in place for paying off that debt. It is equally important to know your future spouse’s credit score and how that could impact your lives together, particularly if you have plans to purchase a home together. 
  • Your philosophies on spending are also something to discuss, as this can determine what approach you will take toward combining your finances. If you are significantly more conservative about spending money than your partner, the best approach may be to maintain separate bank accounts but also have a joint account that you each regularly pay into for shared expenses such as a mortgage or rent, utilities, groceries, etc. Maintaining at least some sort of financial independence can be a good way to avoid arguments over purchases one of you may view as frivolous and unnecessary, but which are important to the other.
  • Budgeting is never fun, but it is the best way to get a clear picture of all of your expenses and to map out everything, from how much you can truly afford to spend as a couple on a day-to-day basis, to how much you need to invest for your future in order to live the life you envision in retirement.
  • Make sure to take out life or disability insurance on both you and your partner and ensure that your coverage is adequate to cover your future spouse if anything were to happen to you and your income was suddenly gone from the picture.
  • Health insurance is also extremely important. If both you and your spouse have separate coverage through your employers, you should take the time to see what is covered by each plan and whether one is more affordable than the other.
  • Determine upfront who will take responsibility for paying the monthly bills and managing the joint expenses.
  • If one person is coming into the relationship with significantly more assets, consider entering into a prenuptial agreement to give that person peace of mind in case the relationship ends.
  • You should both have wills outlining the disposition of assets upon death, since failing to do so can open up your estates to probate. It is equally important to review the beneficiaries you have listed on your accounts, including insurance, investments and retirement accounts.
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