There are many financial conversations you should have with your partner, and the time to start having them is well before the wedding day.
Financial security is a huge part of a happy and healthy marriage. In fact, money can be a massive stressor. According to the Institute for the Divorce Financial Analysts, money is the leading cause of about 22% of divorces. While it may seem futile to have financial conversations with your partner before you’re married, it’s never too early to start talking about this stuff.
The earlier you both get on the same page about money, and start forming a financial plan for the future, the earlier you’ll be financially stable and properly set up later on.
9 Financial Conversations You Should Have With Your Partner
By knowing what to talk about with your spouse, your relationship will become stronger. And, your future self will thank you. There are a lot of aspects to financial planning, and it’s not always easy to understand what you need to do or what’s out there. Plus, when you combine efforts with another human it can get complicated.
This post is here to help you. I’ll list out all the different types of financial conversations you should have with your partner. Conversations about combining bank accounts, paying bills, and paying off debt. And, conversations about insurance, children’s college funds, and retirement. You know, the biggies.
Hopefully it will help you broach a subject that can be sensitive and emotional, so your marriage is set up for success. Let’s get right into it!
1. SHOULD WE HAVE A PRENUPTIAL AGREEMENT?
While there is such a thing as a post-nuptial agreement, the best time to talk about a prenuptial agreement is before you get married.
A prenuptial agreement is when engaged couples put in writing any stipulations they have about their finances, in the event that they get a divorce. The agreement states what assets each partner is bringing into the marriage, and lays out what happens to them if the marriage ends. It is a legally binding agreement if done correctly, and takes a lot of risk out of losing half of one’s money should the marriage end.
You may think that you don’t need a prenuptial agreement. Perhaps you don’t have any money. Or you’re not planning on getting a divorce. However, if either of you owns a business, has property, had existing children from another relationship, has debt, or may have a large inheritance, a prenuptial agreement is something to talk about.
The whole point of this agreement is to not assume that you’re getting a divorce one day. It’s to make decisions, together, while you’re still happy.
2. ARE WE GOING TO COMBINE BANK ACCOUNTS AND ASSETS AFTER WE’RE MARRIED?
One of the earliest financial conversations you should have with your partner is about combining your bank accounts and assets after you get married.
This can be a sensitive conversation to have. These days, most people getting married are very much used to having complete control over their bank accounts. The thought of allowing another person, even your spouse, to have access to money you’ve earned can produce a lot of anxiety.
Be sure to talk about how you each feel about combining bank accounts, and listen to the other’s perspective. If it’s something that doesn’t appeal to you, tell your partner why. Maybe you are both alright with dumping all your money together. Or, one of you could have hesitations. Both of those situations are common.
You may find that a happy medium is what works for you. This could be where you have one joint bank account, but smaller, separate ones that each of you have access to. Or, you share some assets but not all assets. However you set up your system is fine, as long as it works for both of you.
3. HOW WILL WE HANDLE DAY TO DAY FINANCES?
Once you’re married, and living together, do you know who is going to take care of your finances on a day-to-day basis?
There is a lot that can go into this. There’s making sure the bills are getting paid, monitoring if the bank accounts have enough in them, and tracking your financial goals (more on that later). While it’s possible to have both of you involved in this, it’s essential that at least one of you is taking care of your financial administrative tasks.
One suggestion is to have one partner take the lead on the day-to-day and monthly financial management, and the other stays involved. You can plan on having a monthly meeting to talk about finances. During that meeting, go over the bills from the previous month, and anything that is coming up next month. You can review your bank accounts, and any other statements you have handy. This will keep you both informed, on the same page, and also make sure the bills get paid.
4. IS THERE DEBT WE NEED TO ELIMINATE?
Chances are, one or both of you are entering your marriage with some debt.
Now, I’m not talking about mortgage debt. That’s a little different. Rather, this is debt associated with credit cards, student loans, or cars. Before you get married, you need to have a financial conversation with your partner about debt. Be honest if you have some. Tell each other the amounts. Discuss your concerns with paying the debt off.
If you know it, tell your partner your credit score. In your marriage, it’s likely you’ll want to make a big purchase together and they will find it out anyway. Let your partner know the reasons why your credit score is less than stellar, if it’s on the low end. Share with them any lessons you’ve learned about finances so you can both be on the same page.
By learning about each other’s debt, you can form a plan, together, to eliminate it.
5. AM I SET UP AS YOUR BENEFICIARY?
One thing that many people forget to do when they get married is to update their beneficiaries.
A beneficiary is the designated person who will inherit your assets in the event that you pass away. These assets could be your retirement accounts, investments, property, or businesses. If you’re married, and you have someone other than your spouse designated as your beneficiary for any of these items, it can become very contentious in the event that they do not inherit your assets.
When it comes to this stuff, don’t rely on the law. Don’t assume that everything will go to your spouse. Even if you have a Will (more on that later), it’s best for all your documents to be consistent. When someone dies, it can get really ugly, very fast, among their living relatives. So, do everyone a favor, and update your beneficiary when you get married. And, check all your assets each January to make sure it all still looks correct.
This is one of the most major financial conversations you should have with your partner, and can save a ton of grief later on.
6. DO WE NEED A WILL OR TRUST?
A will and a trust are very similar, but different.
A will is a legal document that lays out your wishes after you die. It states what will happen to your assets, and where your children will go. A trust is a document that allows a trustee to own your assets, and also can make stipulations about your future assets and wishes for your children. Both are valid documents, but serve slightly different purposes.
A trust is more expensive to create, and more complicated, but helps reduce the need for probate later on. The other great thing about a trust is it can help you and your partner combine assets. By making you each a trustee, and putting all property and investments in the Trust, you each become owners of whatever is in the trust. The process of inheritance and ownership transfer is much easier if you already own a Trust that owns an asset.
No matter what your situation is, if you have a will or trust, life should be a lot easier for your family if you pass away. In either case, have this financial conversation with your partner. Consult with a lawyer as well. There are sources online that can help you, or you can work with someone locally.
7. WHAT ABOUT INSURANCE?
When you’re married, it’s essential that you talk about and look into insurance.
Now, I’m not talking about car or home insurance. I’m talking about Term Life Insurance, and Disability Insurance. Once you’re married, chances are you that you will become dependent on one or both of your incomes. If one of you passes away, or becomes disabled, life and disability insurance will help cover your lost wages.
The need for these types of insurance goes up if there is just one income in your home, and if you have young children. Yes, there is a process to become approved for life insurance. But, if you’re young and healthy the process is fairly easy. If you have an injury or health issue later on, you could be denied.
So, definitely have this financial conversation with your partner. Even if your employer currently provides insurance for you. It may not be enough, and if you change or lose your job, the insurance could go away. It’s best to be prepared if something tragic happens.
8. WHAT ARE OUR FINANCIAL GOALS, AND HOW DO WE MEET THEM?
One of the biggest gripes that couples can have if is if they have conflicting behaviors when it comes to money.
One partner may love to save money, and the other loves to spend. It’s important to get on the same page, early and often, about financial goals. Not only should you have this conversation with your partner, but you should put action behind it.
Say that one of your goals, together, is to buy a home. Well, you’ll have to actually have a plan for saving for the down payment. This may mean paying off a car first, changing careers, moving, or being incredibly intentional about what you spend and save.
Having financial conversations with your partner about money, savings, and spending, should be initiated as soon as you know you’re planning a future together.
9. WHAT INVESTMENTS DO WE HAVE?
As mentioned before, one or both of you may be coming into the marriage with some existing investments.
In order to fully understand your finances, you each need to know what these investments are, where they are located, and how much they are worth. They could be retirement plans like 401K’s. Or, IRA’s and mutual funds. They could even be homes or property.
However the investments are structured, be sure to ask your partner what’s in their name. And be prepared to share with them what you have as well. Knowing these things will allow you each to make informed decisions about retirement, big purchases, and general financial planning.
CLOSING THOUGHTS
The suggested topics above are just scratching the surface for financial conversations you should have with your partner. Once you have them, you should continue having them, as often as needed. Being married means that you’ll need to work together, as a team, to make sure you properly plan for the future. It means taking each other’s debt on, and helping each other succeed. And all of that starts with a conversation.
More From Hummingbird Wedding Advice:
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