Updated March 2017 — Managing your own money is challenging enough. Merging your finances with someone else's — even if it's someone you love — makes things even more complicated. While it's true that many married couples fight about finances, if you start the conversation early and make sure you're on the same page regarding your financial goals, money doesn't have to be a source of stress.
Broaching the conversation may not be easy. According to an online survey of 802 couples conducted in January 2016 by Versta Research on behalf of Wells Fargo & Company, finances create marital stress in four out of 10 couples (43%), and more than a quarter of couples struggle with disagreements and marital stress related to money at least once a month. Couples struggle most with their different approaches to money, including how to spend and how to save.
"When you're in love, it's easy to assume that the other person's world view about financial matters is the same as yours, but that's not always true," says Pat Armstrong, Senior Director of Family Dynamics at Abbot Downing. "By having a conversation in advance, you avoid surprises, and you have an opportunity to think about how to handle any differences going forward."
Here are four important financial issues Armstrong suggests you discuss before you walk down the aisle:
What's your money philosophy?
Many of our beliefs about money develop in childhood, and they can be tough to change. You and your future spouse may both have strong (and potentially different) opinions about what's worth spending money on, how much you should save, or how much risk to take when investing.
It's important to discuss those values now so they don't become a source of conflict, Armstrong says. You can ask each other questions such as: Are you a spender or a saver? Do you usually fund big household purchases (like a car) with a loan or do you save for them? What kind of investor are you?
"There are no right or wrong answers, and you don't have to agree," Armstrong says. "It can actually work out well for a spender to marry a saver, as long as you're aware of those differences and are talking about them."
"When you're in love, it's easy to assume that the other person's world view about financial matters is the same as yours, but that's not always true." —Pat Armstrong, Senior Director of Family Dynamics at Abbot Downing
What are your assets and liabilities?
If you're considering a prenuptial agreement, you'll be required to disclose all of your assets and liabilities. But even if you're not, Armstrong says, it's a good idea to exchange information about your income, assets, savings, and obligations, such as alimony or child support. It's also important to disclose any debt you're carrying, whether it's student loans, credit card debt, or unpaid medical bills — and discuss whether that debt will be paid jointly or by the person who incurred it. You may even want to share your credit reports.
"If you plan to make big joint purchases — say, you would like to buy a house together — and there is something in your credit background that affects your credit score, it's a good practice to share that information now," Armstrong says.
How will we organize our finances?
If you're not already living together, you'll have to talk about which of you — or both — will be responsible for paying bills and household expenses. Traditionally, couples pooled all of their assets together and paid for everything out of joint accounts. But it's not the only approach. You could also choose what Armstrong calls the "yours, mine, and ours" approach, in which you keep your finances separate but have one joint account for household expenses that you each contribute to.
"I know lots of situations where people are very happily married and part of that happiness is that each manages their own financial matters and makes choices independent of what they do jointly," Armstrong says.
Finally, talk about how you'll divide responsibility for the day-to-day practical management of your financial life: Who will pay the bills? Oversee your investments? Check account balances?
What are our goals?
Don't just dwell on the stressful aspects. Take some time as you embark upon this new adventure to have a frank discussion about your goals and aspirations. Start by sharing your financial priorities for discretionary income, Armstrong says: Is taking a trip every year more important to you than having the newest car? Do you like to buy a new wardrobe every season? What are the top spending priorities for each of you?
Then, discuss where you envision yourselves in 10 or 20 years — or longer. Discussing your goals now may increase your chances of achieving them down the road. Consider questions such as: Do you want to start a business? Does one of you want to stay home with the kids? At what age do you want to retire?
Set up investments that match your goals and craft a budget together that starts you on a path toward reaching those goals, Armstrong says. If that seems overwhelming, set up a meeting with your financial team.
"The success of relationships over time tend to be based on shared goals of where you want to go as a couple," Armstrong says. "If you're going to go the distance together, it's best to start working out any differences you have now."