First, comes love, then comes marriage, then comes divorce? Unfortunately, this may be the case for many Americans heading into marriage. When you walk down the aisle, you don’t imagine your marriage ever ending in divorce. From lack of commitment to growing apart, there are plenty of reasons couples choose to part ways. Another leading factor that may cause divorce is financial incompatibility.
Understanding how your partner spends and saves money could be imperative to the success of your union. So, here are some things you should consider before forgoing discussions about your finances.
Should Financial Compatibility Be a Factor When Selecting a Partner?
There are many factors to consider when selecting a mate. Everyone has different goals and desires for their future and they need to find someone who has similar objectives. One factor that is often forgotten is the financial compatibility of your partner to be.
Before you tie the knot with someone who doesn’t make their financial well-being a priority, contemplate these consequences:
- Your credit could be negatively impacted. When you enter into a new marriage your credit is not combined, however; if you decide to open a joint account you could be responsible for any neglect to the account. According to Experian, if you miss a payment or are unable to pay a debt, it will negatively affect both credit records.
- All of your excess money may be devoted to paying off debt. If your new spouse has a large amount of debt, you may end up using all of your expendable income for repayment. This could be a huge burden for your new marriage.
- You could be signing up for a life of financial struggle. Have you ever heard the saying, “Old habits die hard?” This is true with financial struggles as well. It’s hard to change someone’s financial habits, especially if they have no desire to do so. If your partner struggles financially, this could be an insight into your future.
- You may not be able to purchase your dream home. Experian also states that if your spouse has poor credit, this could impact your ability to qualify for a future loan. How disappointing would it be if you found your dream home then couldn’t get approved for the loan?
- You may discover their financial situation is worse than you had originally thought. You would hope that your partner would be 100% honest with you about their financial situation, but sadly, this isn’t always the case. You don’t want to end up marrying someone whose financial struggle could impact the rest of your life.
How to Have Difficult Financial Conversations with Your Future Spouse
So, now that you understand the importance of finding a spouse who is financially compatible with you, how do you start the conversation? Finances are often a challenging subject to discuss. Being transparent with your financial situation can leave you feeling vulnerable or embarrassed. In some cases, you may not even understand the scope of your own financial well-being. No matter how you feel about discussing your finances it’s an important subject to broach.
It doesn’t have to make you feel uncomfortable or insecure if done in the correct manner. Start by chatting about your financial goals and dreams. Discuss what you want to accomplish in the next few years. If you talk about money as a tool to get the things you want, it may yield more feelings of excitement than fear or embarrassment.
If discussing money had been a challenge for you and your soon-to-be spouse, try starting with small conversations here and there. You need to ease into discussions about finances until you get more comfortable speaking about your financial future together and truly understand your partner’s financial situation.
Lastly, continue to be open and honest about your finances. Set a good example for your partner to follow. Transparency will make it easier for your partner to trust you. Remember these things take time, so be patient during the process.
How to Make a Plan for Combining Finances?
Once you do walk down the aisle, merging your finances after you wed can feel overwhelming. So, take a deep breath and try these few steps toward combing your finances with your new spouse.
- Evaluate your new financial situation. Take time to sit down with your spouse and evaluate all of your financial statements. Bring all of your credit card statements, bills, student loans, investment accounts and other bank accounts. Bring anything you can think of that will be important in determining your financial situation in the marriage. Even if you are embarrassed about some debt or outstanding expense, you still need to bring it to the table. Be as open as possible.
- Make a budget. Where does your money go? What are your expenses? If you don’t know what’s coming in and going out, how can you develop a successful budget? This is the time to organize your expenses and get clear on who should pay for what. This can seem like a mundane task, but it doesn’t have to be. Get creative and think of ways to make this time together enjoyable.
- Determine how you handle your expenses. Some couples are most successful by opening a joint account to pay all bills, while others keep their accounts separate and divide up expenses accordingly. Decide what will work best for you and your partner.
- Develop financial goals and objectives. There are plenty of financial goals you could strive for. Here are a few to get you started:
- Pay down debt
- Build an emergency fund
- Increase retirement savings
All of these ideas may seem great in concept but may still yield some financial challenges. Dan Kellermeyer, financial planner and founder of New Heights Financial Planning, has been happily married for years and he suggests these few tips to reaching financial success together:
- Start slow. Kellermeyer opened a joint account with his wife while they were engaged to pay for the wedding. It gave them the ability to ease into a budget before fully combining their finances after they got married.
- Carve out your own budget. Give yourself an allowance. By having an allowance, you won’t feel restricted.
- Budget together. It’s important to meet regularly to make sure you and your spouse are on the same page.
- Pursue a common goal. Whether you are looking to purchase a home or pay down debt, pursuing a goal with your spouse can help bring you closer together.
“I think the emotional hurdles bring the biggest challenge. For me, the biggest challenge was feeling a bit more exposed since someone else has an eye on my spending, even though we were married,” Kellermeyer added.
There are many different solutions that may work for you and your mate. Try different things and see what works for your new marriage.
What If You Want to Decide to Keep Finances Separate?
You and your partner can decide how you want to manage your finances. If you feel as though your spouse is not good with their finances or has poor credit, this may be a good idea while you help them establish positive financial habits. If you feel uncomfortable merging your finances, you can choose to maintain separate accounts.
Keep in mind the second you decide to open a joint account, both parties are responsible for any debt accrued. Until you combine finances, your financial status will be separate.
The Bottom Line
Every couple is different when it comes to managing their finances. There is not one right way to manage your money. Find what works best for you and your partner and remember to continue to be honest and transparent. Great things take time!
What financial challenges do you and your partner have? Let us know in the comments below!
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