Getting married goes far beyond the bonding of hearts and souls. It's
also the blending of breakfast cereals, bath mats and, as unromantic as it
sounds, bank accounts and debts. That's where the "for richer or for
poorer" part of your vows comes in. Many couples avoid the subject,
believing that a partner is fiscally sound (considering the way you two
have wined and dined!) or would have alluded to that $70,000 school loan
he's shouldering.
You may feel like you know everything about that perfect person beside
you, when in reality you only know what he or she has told you plus the
answers to questions you've thought to ask. That leaves a lot of gray
area, especially when it comes to finances. Sure, no one likes to talk
about money, but consider this: Money is the number one reason couples fight
and is the leading cause of divorce.
Now that we've gotten that out of the way, know this: Communication is the
only way to make sure your money burn doesn't turn into a marriage buster.
Now's the time to grab your partner and lay all your cards on the table.
START TALKING NOW!
It's important to get comfortable conversing about money. For some people,
this isn't easy, especially if money was never discussed in their home
growing up. Be sensitive and patient, but try to get the dialogue going as
soon as possible. "A lot of couples don't talk about money until they get
married," says Beth Kobliner, a financial expert and author of Get A
Financial Life: Personal Finance in Your Twenties and Thirties. "If
you haven't had a conversation about debt and student loans, be prepared
to be surprised."
ASSESS YOUR STYLES
Try to get a sense of each other's spending habits. Are you a penny
pincher and savvy saver? Does your partner blow each paycheck buying the
latest fashions? It's said that opposites attract, but opposite spending
styles can spell trouble. Understanding these differences will help you
solve financial issues (read: compromise) in the future.
CONFESS YOUR SINS
Time to come clean. Pull out your bank and credit card statements,
checkbooks, information on all your assets and debts, any benefit packages
you may have from an employer -- basically, everything and anything
related to your current and future cash flow. A critical factor, but oft
overlooked, is your credit rating. Kobliner suggests that each of you
order your personal credit report and compare notes. In fact, she
recommends that you get three copies of both, one from each of the top
three credit report companies, to cross-check information. Reports can be
ordered from Experian (www.experian.com) at (888) 397-3742, Equifax (www.equifax.com)
at (800) 685-1111, or TransUnion (www.transunion.com) at (800) 888-4213.
Review them carefully, check for mistakes, and notify a company of errors
as soon as possible.
SURVEY THE DAMAGE
With papers covering every square inch of your living room floor, you're
ready to get down to the nitty-gritty: How much do you owe? How much do
you make? What are your pension funds, stock, life insurance, or
real-estate holdings worth? What are your monthly expenses? What do you
pay for health and disability insurance? Once you're married, you may want
to choose one to cover you both. After all is said and done, what's left
at the end of the month? Note: Mentally earmark some money for an
emergency fund. A good rule of thumb is to have sufficient dough in the
bank to live on for three to six months should you lose your job, be
temporarily unable to work (a car accident, for example), or rendered
homeless due to fire or flood.
SET PRIORITIES & GOALS
Finally, the fun part -- sharing your dreams for the future. Do you
fantasize about traveling the world, going back to school, building a
home, buying a car, having babies? When? No matter how little your stash,
it's important to decide together how it should be spent or invested. And
don't forget that goals cover serious issues, too, such as contributing
toward a parent's health care. Knowing that you share similar goals gives
you incentive to make the sacrifices necessary to reach them. You may also
discover that your goals differ wildly. Apply a little creativity and a
lot of compromise to prioritize goals as a team, or figure out a way to
nurture individual -- and dueling -- dreams at the same time.
DECIDE ON A PLAN OF ACTION
You've talked, cried, cuddled, and crunched the numbers. Now it's time to
devise a realistic and specific plan that takes your states of affair and
goals into account. Three options: Keep separate bank accounts and split
up the bills; marry your funds in joint accounts; or open a joint
household account for bills but maintain separate accounts for personal
spending. The last method allows each of you to retain some spending
freedom and still cover your shared monthly expenses, but isn't thrifty if
your bank charges you a hefty fee to maintain each account. Last but not
least, decide who is responsible for paying the bills, consolidating
statements, keeping tabs on your savings, etc. Assign duties based on each
person's strengths.
KEEP TALKING
Don't think that because you've had the big talk, you're done. Check your
progress every month, and adjust your course accordingly. Unexpected
expenses and aspiration tweaks are certain to occur. At the end of a good
month, be sure to reward yourselves with a little treat (stress on
"little"). This is tough stuff -- you deserve it!
