Get married? Money problems no couple should ignore

Talk to any married couple and you know that money is one of the most common stressors, and studies show that financial problems are among the top five reasons for divorce. Couples fight so much about money because each partner comes in with their own financial baggage, from personal experience, debt and even cultural expectations. But one of the best ways to prevent this stress is to start talking about money early and often, especially before you get married.

To help you get started, I sat down with Erin Lowry, author of the three-part Broke Millennial series, to talk about what engaged couples should discuss before tying the knot. We go into everything from premarital relationships, pooling finances and dealing with financial insecurity.

Erin, thanks for joining me. Let’s start with a big one: What do you think are the three most important things a couple should do with their money before getting married?

Marriage is the biggest financial decision you will make. Not your wedding. Your marriage. It is extremely important that you enter marriage being able to have financial conversations in a healthy way.

Here’s how you can make a healthy financial decision:

First, talk about money. I know it sounds simple, but it’s alarming how many people choose to get married without achieving complete financial nudity. You need to know all the ins and outs of your future spouse’s finances, including salary, debt, financial goals, and whether the two of you will be helping support other family members. Yes, that’s your job. No matter how you plan to handle money in your marriage, your partner’s financial situation will now affect yours.

Second, set and prioritize your financial goals. Your financial goals should be the foundation of your overall financial plan. Setting and then prioritizing your financial goals is an important part of getting on the same team as a soon-to-be married couple.

And third, discuss a prenup. Guess what, you have a prenuptial agreement. These are just the standard laws of your state. You should find out what your state’s laws are regarding the division of assets brought into the marriage and created during the marriage in the event of a divorce. Of course, no one goes into marriage thinking they’re going to get divorced, but life is long and people change. You also have no control over another person. Even if you never leave your partner, you cannot control his or her actions. If you are not satisfied with your state’s version of equitable division of assets, then you should consider entering into your own prenup. Think of it as marriage insurance. You don’t have car or homeowner’s insurance because you hope or think something will go wrong. You have them just in case. Prenup is the same.

I guess most people don’t understand that their state’s property division laws are essentially their prenup. Therefore, the idea of ​​having a prenuptial agreement is more about making it work for you and your spouse. Makes perfect sense.

What advice would you give someone who is unhappy with the standard state laws and wants to enter into their own prenup but their partner refuses to sign it?

For starters, you need to start the prenuptial conversation early. Really early. I started mine even before my husband and I were engaged. I asked him what he thought about prenups and used it as a way to explain why I thought they were important.

Don’t escalate this into a fight or threaten to call off the marriage until he or she signs the prenuptial agreement. Instead, you need to have a healthy, productive conversation (perhaps with a therapist) about your whys. Why is your fiancé uncomfortable with prenup and why is prenup important to you?

A prenup should ultimately feel fair to both parties and not be used as a way to exert influence or control over another person. If the prenuptial agreement doesn’t seem fair, then you should have a conversation about what would seem fair to both parties and explain your reasoning without anger.

You should also never blame the parents or other family members for asking for the prenup. This is a quick way to ruin your future husband’s relationship with your family!

I want to stay on the subject of premarital relations for one more question. Any important points couples shouldn’t overlook when writing one?

Hire lawyers. Each of you needs your own attorney to have fair representation. One lawyer cannot represent both parties. You can also print out a prenuptial template ahead of time to discuss and discuss together what you think is fair in the context of your relationship and marriage. This can help reduce billable hours if you go in with a united front about what you want in the prenuptial agreement.

Do you think that maybe you don’t need a prenuptial agreement because you don’t have a lot of assets? One consideration: retirement accounts. You need to make sure your retirement accounts are protected, as they are often hit hard in divorce proceedings. There should also be a clause regarding the financial support the spouse would receive if he or she left the workforce to be a carer. For example, a spouse’s IRA will need to be funded or if you are out of the workforce for a period of time, it will void the alimony waiver.

Do you have any suggestions for couples who struggle to open up and talk about their finances before marriage?

Honestly, you shouldn’t get married if you can’t have healthy, productive conversations about finances. Money affects every part of our lives. Not being able to have healthy conversations about money is setting you up for a long-term struggle. It can also be an indicator of an underlying problem around communication. Instead of rushing into “I do’s,” take the time to meet with a financial therapist or couples counselor to help resolve any communication barriers you two may have.

For engaged couples who haven’t spent much time discussing their finances, are there any red flags to look out for as they begin to open up to each other? Debt, for example, is a sore point for many couples.

Debt need not be a deal breaker. Instead, the focus should be on behavior around money. For example, your partner reveals that he has credit card debt. Having credit card debt in itself should not be alarming. You need to discuss how the credit card debt came about and what the plan is to pay it off. Maybe your partner had an unexpected medical emergency and didn’t have enough emergency savings to pay it off. Even if credit card debt is a relic of past poor money management, it’s not a red flag. A red flag would be continued poor money management. Use today’s behavior to evaluate your partner’s relationship with money instead of being overly critical of their past.

Research shows that millennial couples are combining finances less often than older generations, what do you think are the reasons?

Millennials have historically married a little later in life than previous generations, meaning both parties are more likely to have established their careers and chosen their preferred methods of handling money. It could be as simple as wanting to maintain the status quo after marriage or simply enjoying a level of continued financial autonomy. The “yours, mine and ours” system of being together for shared expenses and separate for personal expenses seems pretty common.

It doesn’t really matter how you manage your finances in marriage as long as you communicate and both feel good about the strategy.

Communication is obviously key. But I also recently read a study which found that couples who pooled their money had better relationship quality. Can you talk a little bit about why this is true?

I actually wrote a comment on this study.

It should be noted that those with fewer financial resources are the ones who find the most benefit from combining finances in marriage.

In the end, it all comes down to communication skills. I really don’t buy the idea that any version of separate finances indicates a crack in the foundation of your marriage. However, this requires higher levels of communication.

This all makes a lot of sense. Now, for couples who decide to combine their money, any tips?

Whether your money is separate or shared, both parties should be able to work as the CFO of your household. It should never be one person with all the knowledge about paying bills, investing and saving.

Those who choose to be 100% collaborative must ensure that it is still a partnership and one person does not become the financial dictator. You have to be careful not to micromanage your partner’s spending habits and accept the fact that you won’t always value the same things. Discuss how each of you is entitled to spend on “wants” versus “needs.”

We’ve covered the types of conversations that should happen before marriage, so what are the three most important things to do after they say “I do”?

First, start implementing your financial strategy and household budget based on your financial goals. You may have to go through the logistics of setting up new joint bank accounts or sharing passwords.

Second, update your beneficiaries. Make sure your spouse is now the beneficiary of your life insurance policy, retirement plan, bank accounts, investment accounts and all workplace benefits. A beneficiary will often revoke a will, so be sure to update your beneficiaries!

And three, update your wills and estate plan (or create one!). I know this is a touchy subject for many, but you should have a will and estate plan, yes, even before you have children, but especially if you have children!

This is all really great and I appreciate your time. One last question with all the financial turmoil going on in the world right now and it can be scary for people who are getting ready to start a life together. Any advice on how to stay calm?

Focus on your own financial household and travel. Remember to celebrate incremental victories and remember to track your progress to reflect how far you’ve come when the going gets tough. Having a partner should be an asset, and it can be, as long as you have open communication, set realistic, actionable goals, and work together to achieve them.