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Getting married is an exciting milestone that comes with a host of changes to your personal and financial life. As the love you have for your partner is likely top of mind during this exciting time, the financial decisions you’ll be making once you’re married can often be overlooked.
Given that roughly one-third of adults with partners report that money is a major source of conflict in their relationship, discussing finances with your partner can be a daunting task, especially since money can be a highly emotional and taboo topic.
Wealth advisers can ease your discomfort by analyzing your financial situation in an objective, non-judgmental way, setting you — and partner — up for financial success, but here are four keys to making any money conversations with your partner a success.
Starting the conversation early
It’s important to start discussing finances with your partner early. Moving in together can be just as much of a financial commitment as marriage, so it’s worthwhile to consider the financial implications of these major life changes before they occur.
First, it is important to be transparent about your respective incomes to decide how you will distribute spending responsibilities. You and your partner may be at different stages in your careers, which could influence how you think about equitably distributing spending and saving.
Many couples run into problems when they try to share expenses evenly without considering their income and debt disparities. If one partner earns a higher income, the other may struggle to contribute their half of the couple’s living expenses and saving contributions.
In many circumstances, it may be more practical to structure your joint finances according to income rather than taking a 50-50 approach. Similarly, individual spending habits might dictate how you share your finances.
Beyond income, it is also important to consider the other financial aspects that you and your partner bring to the relationship. Do you come with inherited wealth? Do you have any assets or liabilities that you should disclose to your partner? For example, one partner may be entering the marriage with student and credit-card debt, so taking on this debt as a couple may impact your ability to save towards your goals.
From personal goals to family goals
Once couples have determined what they bring to a relationship, it is important to establish goals for the family. Decisions regarding where you’ll live and how you’ll allocate child-care responsibilities have significant financial implications.
Domestic and caregiving duties still disproportionately fall to women, which can impact a woman’s professional goals or earning potential, ultimately impacting the couple’s joint financial goals.
Creating a written roadmap for your family’s goals, broken into small, manageable pieces, is a helpful tool to track your progress. It’s also important to factor in any family members that you’ll be responsible for such as a disabled sibling or elderly parent.
Regularly checking in on your progress provides both partners the ability to have full transparency on whether they are on track to meet their goals and provides a platform to openly discuss and revisit the family’s priorities.
Wealth advisers can also help couples leverage commonly overlooked aspects of a wealth-management strategy such as insurance and contingency planning. This may include reviewing the couple’s respective workplace insurance plans for big-ticket items such as dental or health coverage. They can also help you navigate emotional topics such as disability insurance, estate planning, wills and personal directives.
Preparing for uncertainty
No one wants to think about the possibility of a marriage ending before it’s begun, but a prenup, which establishes the property and financial rights of each spouse in the case of divorce, can save a lot of time, stress and money in the future.
Another option for couples who prefer a common-law arrangement is a cohabitation agreement, which has similar characteristics to a prenup, but is tailored to unmarried couples.
The parents of the bride or groom will likely have their own financial concerns leading up to the wedding. Parents who have accumulated wealth may decide to gift or loan money to their child when they get married. Some parents might stipulate that the gift must go towards a down payment on a house, in which case it’s wise to create a written agreement.
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Moving forward together
Getting married is a huge transition. The most important element in navigating this process is ensuring that you and your partner are on the same page. Namely, both partners should be actively engaged in conversations with their wealth adviser to ensure they feel comfortable with the financial decisions being made. They should also avoid seeing separate financial advisers as they will likely receive different advice.
Couples should take solace in knowing that there are many resources available to help them manage their finances as newlyweds. Wealth managers are often happy to engage the children of their clients to help them navigate their finances and help set up a plan. Discussing money may feel highly personal, but asking how those whom you trust manage joint finances can be beneficial to creating your own plan.
Regardless of how a couple chooses to work towards their financial goals, honest communication and nurturing trusted relationships will provide the critical foundation you need to build your new family.
Susan O’Brien is a wealth and investment adviser at Richardson Wealth.