Is there any bigger investment in life than getting married? Accordingly one should look at the blessed union in terms of finances as well as starting a life together. Not sure you agree? If you think about it, a marriage is the potential to buy a home, start a family, and combine finances in a way not seen as a single person. As such, there should be things discussed and questions asked as you start your life together. This is not to dissuade marriage because of finances. But, make good choices so that your life together starts out on the right foot and goals can still be reached on a personal, individual level as well as together.
Just like you asked questions to decide on starting the relationship with your betrothed, you should continue to ask questions. The right questions will help you to learn if your partners’ financial stability, their financial goals & habits, and how all of their financial behavior will be affected and/or changed when “me” becomes “we”. Honesty, during this time of discovery, is paramount to prevent any unexpected surprises when the time comes to make financial decisions, as a unit, like: starting a family business, buying a home, or expanding your family.
Questions you need to ask, include:
- Separate or joint accounts? If they are still trying to stabilize their spending, separate accounts might be advised, at least initially.
- How did your parents spend/save money? You might be thinking how that applies. Well, learned behavior, attitude and actual patterns of behavior surrounding money, can linger into adulthood. For example, if their parents placed no value in long-term saving and spent recklessly, it can be that your partner learned those behaviors and will not mesh with your more conservative habits.
- Dual income family; who will stay home with the baby? Will it be a goal or desire that each of you continue to work throughout the marriage. If that’s not important to each of you, then issues like who will be the primary earner or the stay-at-home parent will solve themselves. If it is, that’s an important discussion.
- Division of bills. Many couples either divide the bills or agree on a specific amount to deposit into a joint account, out of which all bills are paid.
- Risk vs security for investments; conservative vs aggressive. Is your investment style high-risk or ultra conservative? Are you a 401K, IRA, and CDs kind of investor? Or, are you a “greater risk, greater reward” type? It matters, and should definitely be discussed with regards to the family’s finances.
- Do you currently work within a budget? If one does not or has never worked within a budget, it’s gonna be a struggle; especially, considering that they have to it as a team. It may even be advisable, to put this into practice well before finances combine.
- Income goals. What exactly do you each see for your financial future? By asking, and answering this, everything else can be tailored to make these things happen. Do you see retiring at 50 in your future? Is a vacation home in your long term goals? Yearly, bi-annual vacations? All of these things, coming to fruition, will be based on your ability to earn income, pay bills, save, and plan.
- Investing missteps? Have you ever filed bankruptcy? Do you have any tax or other legal liens? How much debt do you owe? You don’t want to find these things out when Carod Properties finds you the perfect home, but then you can’t get the financing.
- Debt analysis (are you managing what you currently owe...how much is that). Basically, do you pay your bills? And, not only that, is it something you can do or are at least cognizant of its importance? Knowing how debt and credit affects the different aspects of your life is a lesson everyone needs, certainly, if there’s someone else depending on you.
If your partner is hesitant or unwilling to have this important conversation, many problems can present themselves down the line. Those potential problems are why some opt for prenuptial agreements—the arising financial woes and how they lead to and are then amplified in cases of dissolution of the marriage. No one goes into marriage thinking, “What do we need to do or discuss in case we part ways?” Don’t think of it in terms of parting, rather becoming one whole, more successfully. When you think of your finances and investment future, as a couple you need to do more than start a joint bank account and divide bills.
