No one likes to talk about money, but disagreements over money can — and often do — put tremendous strain on a relationship. And don’t expect it to get any easier once you are married.
With unemployment still high and the economic future of the country uncertain, fighting about finances is the new reality for many couples, and few are prepared for it. The key to avoid trouble down the road is to get to know each other’s financial styles before you say “I do.”
Unfortunately, money is a sensitive subject for most, and many couples avoid the topic altogether for fear of rocking the boat. “Most people don’t even ask the difficult questions before they get married,” says Mike Sullivan, Director of Education for Take Charge America. “Because of that, there are often surprises down the road. When those surprises are serious, they often get in the way of the relationship.”
Money issues are something any couple will have to deal with, and the sooner you tackle the subject, the better off you will generally be. With that in mind, here are the six most important financial questions you and your future spouse should discuss before you say “I do.”
Question No. 1: “Are you a spender or a saver?”
The first step is to figure out whether you have the same approach to money. If you’re both spenders, chances are that you’ll run into money issues, unless you agree on clear boundaries and budget goals. At the same time, if one person is a spender and one a saver, you will have to work together to forge a compromise between your different styles. And while couples who are both savers may be rich on cash, they are sometimes poor when it comes to having fun and enjoying life.
Our attitude toward money is often unconscious, so each of you may not even know what your primary spending style is. To facilitate discussion, ask each other questions like, “How much of your paycheck or salary do you save?” or “Do you tend to have long-term or short-term financial goals?” This will give you a better picture of what your partner does with the cash in his or her wallet.
Question No. 2: “What’s your relationship to credit?”
Some people only use their credit cards for emergencies. Others pay for everyday expenses with plastic in an effort to rack up rewards points. Some are too worried about debt to even take out a mortgage to buy a home. Others gladly leverage their stock portfolio to invest more money in the stock market.
“Your credit compatibility is going to be a key area of concern,” says Bonnie Eaker Weil, author of “Make Up, Don’t Break Up,” which won the 2010 Reader’s Choice Award for Best Dating Book. “If you are not a credit user and you get with someone who tends to take on credit, you’re better off realizing it up front, because this is something you two will have to work on. Find out as much as you can, as early as you can.”
Question No. 3: “What are your financial goals?”
Everyone has a different endpoint in mind. Maybe owning your own home is important to you, but your partner is more interested in frequent adventure trips to exotic locations. Your partner’s goals don’t have to be the same as yours; but talking about them is useful to get a sense of how compatible you are when it comes to your dreams and aspirations.
Begin by asking your partner where he or she wants to be in five, ten and twenty years. This is not only a great way to get to know each other; it also helps you find common interests to build on. Generally speaking, the earlier you begin to establish common financial goals to work towards, the better off you will be — and not just financially.
Question No 4: “How do we want to manage our money?”
There are numerous ways that couples can manage their money, ranging from having one partner in charge of everything, to sharing all tasks, to any variation in between.
While making one partner do all the financial footwork is unfair, splitting the workload 50/50 might not work either. If one of you hates paperwork and number crunching or is bewildered by the stock market, then that person probably shouldn’t be taking charge of those tasks. Find a fair way to split up the work, which plays to both of your strengths.
Question No. 5: “Are we going to have joint or separate accounts?”
Some couples keep their finances almost completely separate, while others pool everything. Both approaches can work, but it all depends on how you approach it. Surrendering your bank account completely may cause too much stress in the relationship, particularly early in the marriage, and this is important to acknowledge.
If you decide to keep separate accounts, decide in advance how to manage joint expenses and save up for common goals, even as you keep parts of your finances separate. If you pool your income and establish a joint account, agree on a budget up front, so you both know how the money will be spent.
Question No 6: “Are there any skeletons in the closet?”
As you discuss the above questions, keep your eyes (or rather ears) open for skeletons in the closet. People are often embarrassed by their past financial mistakes and are hesitant to admit to being in debt or having bad credit.
But since it will affect both your finances and future together, it’s important to know where you each stand. You might even consider trading credit reports. That way, both partners are on the chopping block.
Ultimately, the openness your partner displays toward his or her finances may signal important things about your long-term relationship.
“If you can’t trust people to communicate openly about money, that’s not a good basis for a relationship,” says Mike Sullivan, the Director of Education for Take Charge America. “If there is something your partner doesn’t want to discuss, there’s a good chance that that person has something to hide. People who have someone to hide are not trustworthy, and if they’re not trustworthy, they’re probably not a good mate.”
As you talk, keep in mind that the goal is to get to know each other’s attitudes and styles around money and to discover your similarities and differences. It is not to establish a ‘right’ or a ‘wrong’ way of handling money.
Ultimately, how successful your relationship will be depends on your ability to manage your differences. Establishing a habit of talking through potential issues in an open and honest way will create a solid long-term foundation for your relationship.