For better, for worse, for richer, for poorer… These words might seem easy to say at the time of a marriage ceremony but they can be a whole lot harder to live out than expected. And this is particularly true when it comes to your financial state as a couple. If you haven’t already discussed money (which you really should do before you say ‘I do’), being a newlywed can bring financial issues into sharp focus.
Many newly married couples don’t believe that they will fight over money but if you’re not on the same page when it comes to your finances, a big money fight is probably on its way.
Here are three money situations that could land your marriage in hot water if you don’t tackle them head on:
1. You want a joint bank account but your partner doesn’t
If you are going to be sharing a household, you need to decide how you will be spending your money as individuals and as a couple. There are pros and cons to having a joint bank account or keeping things separate. A joint account can make household budgeting simpler and help you feel like a team, especially if one partner is staying at home while the other brings in a salary. However, keeping some financial independence in the form of your own bank account can give you some protection, for example, in the case of divorce. Whatever you choose, it’s best to do so as soon as you can – talk to your partner openly and honestly about what kind of financial arrangement will suit your personal circumstances.
2. Your partner won’t tell you what they earn or what they owe
You don’t have to have a joint bank account to have a clear understanding of your spouse’s financial state. If you don’t know what they earn, how they spend their money, and what their financial goals are, you might find yourself in a difficult position when it comes to major life choices like buying a home or paying for your children’s education. Financially, you need to be clear on where the other person is at (do they have debts that must be paid? Or a large inheritance that needs managing?) and you need to be driving in the same direction when it comes to goals (do you want an annual overseas holiday? Does your partner want to build a big house?). Talk to your partner about what they earn and how they see you as a couple spending that money. Take the time to work out a financial plan that makes the most of your money, in line with your life goals.
3. You want to save for insurance and retirement purposes and your partner doesn’t see the need
Many people think that the worst will never happen to them – they’ll never fall ill or have an accident and be unable to work. The opposite is true – an unexpected loss of income can happen to anyone. That is why insurance is an important part of any financial plan. The same style of thinking applies to retirement – you might think you’re too young to worry about a time when you are no longer earning an active income but, thanks to the power of compound interest, the sooner you start investing in your retirement, the better for you and your family. Because insurance purchases and retirement annuities might feel like grudge purchases, its essential that you both understand their importance and commit to contributing to them.
Not talking about money or managing your money in a way that does not allow your spouse to see the full picture can break down the trust in a relationship and do lasting damage to a marriage. Alternatively, if you work as a team and manage your money together, it can be a strong bonding exercise.
Even better if you do so with the help of a trusted financial adviser who can help you put together a plan for preserving and growing your joint wealth today and into the future.
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