About a year before my husband and I tied the knot, we had a financial powwow over margaritas (just one each). We wrote down our personal “numbers” — including savings, debt and credit scores — on Post-its. Then we did a swap. It’s a story I share often and something I know helped us set the stage for a healthy financial relationship.
As my friend and financial author Beverly Harzog says, “You don’t want to wait until you’re madly in love and committed before finding out your future husband has a terrible credit score and $30,000 in credit card debt.” After all, arguments about money are a leading predictor of divorce.
If you’re in a serious relationship or planning to tie the knot, here are seven things you should talk to your partner about now. (Already married? It’s not too late.)
PLAN A MONEY DATE
The first step toward building a solid foundation around money in your marriage is to have a candid conversation in which you openly discuss the basics and share your financial experiences, hopes and fears. “It starts with a heartfelt talk,” says David Bach, author of “Smart Women Finish Rich.” Plan a money date, he says, where you take turns answering questions: What’s your biggest financial fear? How did your parents manage money? What’s your biggest short-term financial goal?
Money management expert Lauren Greutman echoes Bach’s advice and adds that you may want to discuss your financial “bucket list,” as well, to see whether your values match up. Some red flags, according to Greutman: you can’t agree on the size and location of the home you want to live in; one of you advocates stay-at-home parenting while the other doesn’t support it; you’re at odds about how much to spend on your wedding.
STRENGTHEN YOUR SAVINGS
Marriage sometimes comes with the added benefit of two individual salaries, but it can also mean increased costs from paying for the wedding to buying new furniture and possibly purchasing a new home. And that may all happen in just the first year or two.
If you don’t have a strong savings reserve, now’s the time to fuel up. Aim for a six- to nine-month cushion to help pay for these big-ticket married-life incidentals.
UPDATE YOUR WILL AND LIFE INSURANCE
In the honeymoon phase you may not remember — or want — to revisit your existing estate plan and life insurance policy, so updating your beneficiaries in these documents now to include, perhaps, your soon-to-be lawfully wedded partner may be best.
SWAP CREDIT SCORES
Your mate’s credit score can be very telling in terms of the type of financial personality you’re about to marry — and vice versa. In a recent FreeCreditScore.com survey, 30 percent of women and 20 percent of men said they would not marry someone with a poor credit score.
Not saying you should call off the wedding if your partner has subpar credit, but it’s important to get this out in the open soon so you can work on repairs. “Honestly, this is a lot like sharing details about potentially risky sexual behaviors in the past,” says Manisha Thakor, vice president of financial education at Brighton Jones. “This isn’t about judging each other. It’s about loving and trusting each other enough to get financially naked.”
CONSIDER A PRENUP
Prenuptial agreements have more relevance these days (and less stigma). “This is not our parents’ world where people got married in their 20s and came to the union with a blank financial canvas,” says Thakor. “Increasingly we are finding ourselves marrying with much fuller pasts. We may come to marriage with children, with a desire to take care of our parents in their elder years, with debt, with large savings from prior working years.”
A prenup may be particularly helpful if you’re about to embark on a second marriage or for couples marrying later in life. “It’ll determine how those assets built up over a lifetime are protected,” says Deborah Moskovitch, author of “The Smart Divorce.” “You may already have children and a home. In the case of divorce, or even death, you want to protect your assets so they can be handed down.”
To explore prenuptial agreements, you can search online and find sample contract templates at Findlaw.com and RocketLawyer.com. If your prenup requires above-average legalese, consider working with an estate-planning attorney.
Already hitched? A postnup can cover your bases.
COMPARE COMPANY HEALTH BENEFITS
Does your partner have a better health insurance policy, or do you? If you plan to have kids, which health insurance has a more robust and comprehensive plan for expecting moms?
Get to know this now so that once you’re married you can quickly decide whether it’s worthwhile to piggyback on either one of your group health plans (if applicable). There may be a bit of paperwork involved to make the switch, so square this away and have it ready to submit once your marriage license comes through. Acting fast may also help to avoid any gaps in coverage.