Planning for a Financially Secure Marriage

Even for couples that have been living together for awhile, the decision to marry marks a new financial beginning — the first real moment that two people will share a financial future. The irony, however, is that for so many couples, the first big discussion about money doesn’t involve affording a house, car or kids, but how to pay for a big party that lasts only a few hours.

All marriages should start with a celebration. But if more couples thought about the benefits of financial planning first and celebration second, their marriages could be on a firmer footing with potentially fewer money worries in the future. In fact, the 2009 Condé Nast American Wedding Survey reports that the price of the average wedding is now a little over $28,000 (not counting the engagement ring or the honeymoon).

So before anyone rents a hall or starts assigning the bridal party, it might be wise to take the following steps:

Start looking for advice: Find a financial planner to help you map out a formal financial plan. While most planners recommend potential spouses plan with an eye toward merged finances, if certain assets and liabilities are to be managed separately, it’s best to make a plan for that as well. It’s also good to find a qualified tax professional to handle your joint tax matters as well as an estate attorney to get your wills and special directives in place once you’re married — this is particularly important if you’re bringing kids into the marriage. The other steps that follow may actually come before you meet with any of these people, but it’s good to commit to solid professionals at the start of a marriage who can help you plan from day one.

Set aside a week for full financial disclosure: This is a move that all couples should make before moving in together, but when the issue is marriage, it’s a necessity. Each partner needs to show up with their latest credit reports (go to annualcreditreport.com for to get all three for free) and their latest pile of bills and whatever tracking software or system they use for their spending. Bankruptcy records need to be disclosed and discussed if they exist. If there is debt of any kind, both parties need to see the numbers and figure out how it will be paid off and when. If there are children being brought into the marriage, there needs to be significant time set aside to discuss which expenses will be paid by the newly married couple and which might be shouldered by ex-spouses and partners. There also needs to be a full discussion of income and career plans, retirement funds that exist at work and individually and what each partner’s money priorities really are, not the least of which will be plans for buying a home and starting a family. The couple also needs to discuss how they will manage their money going forward — individually, jointly or a hybrid of both methods. With all these priorities decided, then it’s an appropriate time to focus on how you’ll split household expenses.

Take a course: Many religious denominations, as well as colleges, actually hold courses on marriage and cover financial topics as well. Most people think such courses are only for young marrieds, but don’t be so sure. Check around — your community may offer some excellent seminars and courses that might teach you a lot more than you think you know right now.

Create a day-to-day budget: A budget tells you how much and where you are earning and spending each month. You need to initially track what you both spend on groceries, clothing, utilities and other bills. It doesn’t matter if you keep these records on paper or on a computer, it’s just necessary you keep them accurately. If you’re not keeping what you’re spending below your income, it’s time to start adjusting those spending numbers downward. And remember — two do not live as inexpensively as one. 

Discuss housing plans: One might be moving into the other’s apartment or home, but how long will that last? It’s good to discuss housing priorities for the long-term, including the kinds of real estate and geographical areas where you’d want to live.

Talk about investment goals and how you’ll make them happen: At whatever point in life you’re entering a relationship, you need to discuss not only how set you are for retirement, but what you hope your retirement will be like. Talk about assets in your 401(k), Individual Retirement Account (IRA) and other investment accounts. If one or the both of you haven’t taken any steps to plan for retirement, you’re going to need to change that. If you vary widely in age, it’s wise to ask for advice since one spouse will be retired long before the other. It’s also important to study whether your merged investments are diversified enough and whether that combined portfolio reflects a shared level of risk tolerance.

Navigate how you’ll handle pre-marital debt and family issues from previous marriages and relationships: A financial planner can also help you determine how you should handle pre-marital money issues like business assets or significant debt — you may want to consider the need for a prenuptial agreement as well. At the same time, if one or both spouses have children or other relatives from previous marriages that represent a financial obligation, it’s wise to settle those issues well ahead of the wedding and in writing.