The intertwined issues of love and money used to be an area of focus people tended to ignore. With an increase in divorces citing financial issues as the primary reason, more people are now paying closer attention to finances prior to marriage.
Chemistry and compatibility extend far beyond the physical interaction you have with your significant other. When exploring the topic of marriage, be sure to address the money issue prior to saying “I do”. This will assist in fostering a better understanding of what your future financial life might entail.
Here are five financial questions you must ask before walking down the aisle:
- How much debt do you have? This is critical. it provides a snapshot of how your money will be allocated during marriage (at least early on). When debt is brought into a marriage it changes how much can be spent, invested, and shared. $100,000 in student loans, $1,500 per month in child support, and $60,000 in credit card debt are things your significant other should know about prior to saying “I do!”
- Joint or individual bank accounts? This is a decision that needs to be decided upfront so it doesn’t cause a messy recurrent distraction later on. Some couples choose to manage their household finance like roommates, where each is responsible for specific household expenses and pay from separate accounts. Others decide to pool their money together and manage monthly expenses from a joint account. Ultimately, you have to determine what is best for your relationship.
- What are your credit scores? Imagine wanting to purchase your dream home only to learn that your spouse’s credit will be a hindrance to your ability to do so? Or learning that you have to put major purchases in your name to avoid paying double-digit interest rates? Fortunately, your credit scores can be improved over time and with discipline. However, it’s a great idea to share your credit scores prior to marriage so you can begin the rebuilding process.
- How do you manage your money? If a person doesn’t responsibly manage their money as an individual, there’s a high probability he or she won’t do so in marriage. If budgeting is important to you, then you need to make this known. Get your future spouse to understand the importance of budgeting.
- What assets are you bringing into the marriage? Statistics show that many people are waiting until later in life to get married. Because of this, individuals are coming into marriage with more assets than in prior times. Discussing assets are important so there aren’t any misunderstandings on how the assets will be co-mingled after marriage.
Discussing money should not be a sore point or cause for contention in your relationship. It should help two people to arrive at an understanding in an area that is critical but often neglected. When the money discussion is side-stepped it can wreak havoc on a marriage. As you prepare for your life together, be sure to include a financial planning.