When the ceremony is done and the honeymoon is over, newlyweds are left with the financial aftermath of the wedding and a number of financial issues facing them in the not-too-distant future. Financial issues can add stress to an already sensitive situation, but by starting to ask tough money questions before the vows are even exchanged, couples can help keep some of that stress at bay. As relationship consultant Genevieve C. West put it, “Financial transparency in marriage will help cultivate trust, and will contribute to longevity and happiness in marriage.” With that in mind, we’ve spoken with relationship and financial experts, and compiled the top 10 financial questions to ask before getting married.
1. What’s the debt situation?
If you’re starting your life together in debt, be sure you’re aware of it. “Make sure all the financial skeletons come out of the closet before the big day — discuss school loans, credit card debts and other prior obligations (child support or private loans),” ING Financial Partners financial adviser Holly Kylen advises. “As uncomfortable as this topic might seem, you don’t want any unexpected surprises when it comes to debt obligations. Your debt — and your partner’s — impacts not just your collective bottom line but also your ability to jointly make financial commitments, like buying a first home.”
2. What’s the credit situation?
The moment you try to make a major purchase together, your credit will come into play. Make sure you address it before the big day. “Each should present a copy of their credit report for the other person to review and talk about what is on it,” Amy Rose Herrick, Chartered Financial Consultant suggests. “How are you going to correct any negative comments or repay any listed unpaid claims against you?” Andrew G. Poulos of Poulos Accounting & Consulting, Inc., concurs. “There are so many couples that get married and they have no idea what their partner’s credit looks like. Credit and financial problems can be a major challenge in a marriage, and 70 percent of the time it’s the reason why couples divorce. One spouse having poor credit can be challenging.” Being aware of the situation from the outset can help you plan your purchases and set you on a path toward improving poor scores.”
3. Should we have a prenup?
It’s a topic no newlywed wants to think about, but the chance of divorce has become a fact of life. “No one comes in with equal assets or earning capabilities,” Amy Rose Herrick explains. “Ask yourselves which attorneys you will use for a prenuptial agreement before you wed in order to protect both parties, especially if this does not go as planned for the next 50+ years.”
4. What if there’s an emergency situation?
Ask yourselves what will happen if an emergency arises. Amy Rose Herrick explains, “If you need to pay for something extra or unexpected, are you willing to get a short-term part-time job to cover that expense and avoid accumulating too much long-term debt? Do you have an asset you will sell if needed? How much is it worth if it had to be sold quickly to raise cash?”
5. How should the budget be handled?
“Usually one person is naturally better at managing and organizing the finances,” relationship consultant Genevieve C. West explains. “Discuss how you will work together so the other partner doesn’t feel like their spouse is lording the budget over them.”
6. What do our records look like?
A number of past records come into play when a couple gets married. Make sure they’re addressed before tying the knot. Eustace L. Greaves Jr. of Greaves Financial Services suggests asking questions like “How many judgments, liens, bankruptcies, repossessions or foreclosures have you had in the past five years?” and “How is your driving record?” The answers to these questions can impact your credit-insurance score for auto and home insurance, as well as the cost of home and auto insurance. Andrew Poulos suggests asking additional questions like “Do one or both spouses have tax debt they owe to the IRS or the state government?” If so, you’ll need to plan and be careful how you file because prior years’ tax debt can be offset with future income tax refunds that both of you will get when you file jointly.
7. What if a work- or family-related financial issue arises?
A sudden promotion or family situation can raise big financial questions for a couple. To help better prepare for them, Andrew Poulos suggests asking questions like “Whose career is more important if a job relocation becomes necessary?” and “What will happen if a spouse has parents that need financial assistance?”
8. Will we have joint accounts?
There are pros and cons to both joint accounts and individual accounts, but it’s up to you to decide what will work best for your situation. “A joint checking account means that there are no money secrets in the marriage and that communication is going well,” Genevieve West explains. “It will take practice, particularly if one person has been on their own for a long time, or if one of you is accustomed to spending freely, but learning how to communicate about a bank account will pave the way to better communication in other areas as well.” If you decide to maintain separate accounts, Bryan Beatty of Egan, Berger & Weiner LLC recommends addressing how you’ll handle expenses. “Will we merge everything or will we run a “spouse A” set of accounts and a “spouse B” set, with a joint account for the household expenses?”
9. Who will hold the financial responsibility?
Skip Johnson of Great Waters Financial explains, “Couples need to work together to determine who will be responsible for which financial duties. One person may like paying bills while the other person hates it. Or maybe both feel the same way, and they need to take turns. What’s important is deciding who will do which financial chore, and also making sure that both people feel like they’re part of a team and are working together to achieve their mutual financial goals.” Cheryl J. Sherrard of Clearview Wealth Management adds, “Decide what level of spending you would want to know about before your significant other made a purchase without you.” Addressing this early on will help prevent squabbles over smaller purchases.
10. What are our goals?
Chances are you’re both going into this relationship with your own long- and short-term financial goals. Take the time to discuss them. “Write these goals down and share them with each other,” Andrea Woroch recommends. “Though you don’t need to have them necessarily lined up perfectly, you want to work toward a common goal, whether that’s being able to take an international trip every few years or saving up to buy a house. Don’t forget that when you get married you need to compromise.”