Ron Lieber writes the excellent “Your Money” column for The New York Times. Last week, he shared a list of four money talks to have before marriage. Lieber writes:
Divorce tends to be emotionally gut-wrenching for the people who go through it (not to mention those around them). But most couples don’t realize that divorce can also be among the most ruinous financial moves anyone can make.
This article struck home for me. No, Kris and I are in no danger of getting a divorce (I love my wife!), but we’re at that stage in life where the people around us are passing through rocky stages of their marriage. Some are even getting divorced.
On Monday I spoke with a friend — let’s call him Mike — whose marriage is floundering. Mike and his wife are wrestling with a variety of issues. The acute crisis was caused by infidelity, but the chronic crisis — the ongoing problem — involves a conflict over money.
Mike and Kathy
Mike and Kathy didn’t talk about money before they got married. They were young, both had jobs, and both spent most of what they made. After they married, they joined finances, as most people do. (For a discussion of this subject see: Which should you choose: Joint or separate accounts?)
Things were fine for a while. But then Mike noticed that Kathy seemed to have a problem. She was a shopaholic, a compulsive spender. Plus, their lifestyle expanded so that they were living paycheck-to-paycheck instead of having a bit of a surplus.
Time passed. Mike and Kathy bought a home. They had two children. Finances continued to be a sore spot — they fought about them often. They never seemed to have enough money to get ahead. It burned Mike up to open the bedroom closet and see Kathy’s wardrobe: dozens of expensive items, many still with the tags. Once, he opened the trunk of the car to discover more expensive items that Kathy hadn’t even bothered to carry into the house.
Slowly but surely, Mike and Kathy fell into debt. They got into trouble on their mortgage. Mike had always handled the couple’s finances, but to “teach Kathy a lesson”, he gave her the checkbook and asked her to pay the bills. It didn’t help. Indeed, their financial crisis accelerated. Their debt soared. Their home went into foreclosure. Creditors began to call. Earlier this year, they actually lost their home.
Things came to a head in September. Other cracks in the marriage forced Kathy to move out, leaving Mike to care for his two sons. “But you know what?” he told me on Monday. “Financially, this has been a real eye-opener. With Kathy gone, I’ve been doing the accounts again. I expected us to lose money, like we do every month. But we had a $1500 surplus last month. $1500!.”
Mike says maybe he shouldn’t have tried to teach Kathy a lesson. It backfired on him.
Four money talks
Mike and Kathy may or may not get a divorce. But one thing’s certain: Until they address their financial issues, they’re going to continue to have problems. But the real time to tackle these issues was before they tied the knot, not ten years into the marriage.
In Ron Lieber’s recent article, he lists four financial issues that ought to be discussed before marriage:
- Ancestry. What is your money blueprint like? What did your parents teach you about money? How your family models money plays an enormous role in your own relationship with the stuff.
- Credit. Even though it’s not romantic, some experts recommend that prospective partners pull their credit reports (and scores) together and discuss the results. On an earlier episode of The Personal Finance Hour, Andy shared that he asked his girlfriend to pull her credit score on their third date! (And as he’ll share in a guest post this afternoon, they also signed a prenuptial agreement.)
- Control. Before you get married, decide who is responsible for which portion of the household accounts. Decide the family financial structure. Know what your budget will be like, and how much each parter is allowed to spend freely.
- Affluence. Finally (and to my mind, most importantly), discuss your financial goals. How wealthy do you, as a couple, want to be? What are you willing to sacrifice to get there? For my upcoming book (Your Money: The Missing Manual), I interviewed my accountant. When they were first married, he and his wife lived like paupers for five years so that they could pay off all of their student loans and set up a solid financial base for the future. They worked together toward a shared financial goal.
Obviously, disagreements over money don’t always have to end in divorce. I spoke to another friend last week whose husband has always been something of a spendthrift. They don’t make a lot of money, but he certainly knows how to spend plenty of it. His bad money habits had caused cracks to form in the marriage. But with some guidance from a church pastor, he’s changed his ways. My friend is optimistic about their future — financial and otherwise.
For more on this subject, check out:
- Ask the readers: How can I get my wife to talk about money?
- Investing as a couple: Draw on your differences
- Ask the readers: What can I do if my girlfriend isn’t serious about money?
- Daily links: Money and relationships (that’s the first time I’ve ever pointed back to a daily links post from a real article!)
More than usual, I’m curious to hear the experiences of GRS readers. Did you and your partner discuss money before making things permanent? How do you handle your finances? Is it effective? Have you been through a divorce? How has it changed your outlook on money — especially when it comes to shared household finances?
This article is about Planning, Relationships
Nice post. I agree it’s important to be on the same page financially before getting married. Some people are exact opposites in the financial arena and if both husband and wife aren’t willing to compromise in some areas then it’s gonna be trouble.
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When we bought our house, opened a joint account and each contribute a set amount monthly, to pay for the mortgage and household expenses like electric, internet, repairs, etc.
The rest of our money we keep in seperate accounts. This strategy works for us, because we never have to worry about how the bills will be paid (everything is automated too), and neither one of us feels one is contributing more than the other. As far as our individual expenses (cars, cell phone, etc.) we’re each on our own.
Of course, we don’t have any kids, which would make the money handling much more complicated. I’m curious to know if anyone with kids uses this type of system, and how they make it work?
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My wife and I did talk about money before we got married but since both of us were still in school and we were young we didn’t really understand the implications of what we were talking about. We got married and were pretty much broke, as she was preparing to take her nursing boards and I was starting a new job. Initially, we decided to merge our accounts and both work on the budget and track spending and so on. That quickly turned into a mistake. Our money ancestry is very different and so is our comfort with money, numbers, and math in general. I’d rather talk it out just about any time and for her, talking about it usually means something must be wrong and that stresses her out. (That comes from her family letting her know when they were tight, even though she was young and had no control over the situation.) Slowly it evolved to where it is today where we plan the time to talk about money and I handle setting up a budget and letting her know how we’re doing. Then we make decisions on how we want to attack our student loans, credit cards, etc. We’ve only been married for a year and a half so I’m sure things will change more and more as time goes on and we move from paying off loans, to owning a house and raising kids. I’m not sure if we’ll ever to get to anything resembling permanence as far as our financial structure is concerned. (I know it’ll happen eventually but it’s still a ways off.)
I’ve learned that simple is best. As long as we put something away in savings, and we pay our bills, it’s best for us to just have a pool of money that we can tap into for what we need. For everything else, we check with each other for now. Eventually, we hope to earn enough to cover more than just the basics and our little indulgences (eating out or grabing lunch out, when necessary, instead of packing or eating at home mostly) and to have our loans paid off so we can put our money to more fun and useful activities.
At least we have the same goal: To not have to worry about making it to the next paycheck and be able to spend wisely and enjoy life. If we’re rich to the rest of the world, fine; if not but we’re happy with our lives, that’s even better.
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This is a great post and made me think of my own situation. Hubby and I lived together for about 4 years before we got married 3 years ago. During that time I was in grad school and he was working so money wasn’t free flowing. We’ve been pulling our credit reports 3 times a year ever since we could get them for free, before that we did it once a year. We set up a budget and started to have an informal monthly “finance meeting”, were we talk about what’s coming out, what’s coming in and where can we cut. Thing is I always execute on the financial decisions, negotiating lower rates, paying the bills, etc.
We recently encountered a problem however, we just bought a house and I’m pregnant with our first child but he doesn’t want to give up certain things to cut back on expenses (like his gym membership when he can go for free at his school). So I did just want Mike did and told him that he will be family CFO from now on cause I’m tired. Fortunately, my husband doesn’t spend freely and is very financially responsible so I’m confident he will not put us in financial danger like Kathy did to her family. I think my husband is just having a hard time dealing with all the changes happening so rapidly and the gym “fight” was his way of maintaining some normality.
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My wife and I discussed money issues (among many other things) while we were still dating. Most of the stuff we covered in premarital counseling was just a rehash of the things we’d already discussed.
We’ve joined all of our accounts together. I’m mainly responsible for keeping things paid and making sure we’re reaching our goals. But we constantly communicate about what’s going on with our finances, what our goals are, and how we’re going to get there. I just have to make sure I don’t discuss it too much, since I’m a financial planner and love to get into the details and analysis. She’s not into it quite that much, but she still wants to understand enough to know what’s going on.
Communication about your values and goals is key before and after marriage if you want to find success. You need to choose to love too, but if you don’t know how to communicate that love your marriage won’t last long anyway!
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This is a timely post for me – I just got married two weeks ago. We’ve lived together for 4 years already and have been sharing living expenses all that time. We also have had a number of talks about our lifestyle, short & long term goals, etc.
One thing that I’m proud of is that when we started to plan our wedding, we made it a point that the wedding represent our marriage – with both of us contributing equally to planning and paying for it and more importantly that we would only pay for it in cash. Starting off our marriage with a commitment to not accrue additional debt was key to us – sort of marked a turning point for each of us in our personal financial stories.
During our honeymoon we had several conversations about our personal finance goals for the next few years before we hope to have children. Eliminate credit card debt, student loans (me), back taxes (him); create joint checking & savings accounts; create short & long term savings accounts : vacation, new cars, first home.
We know it won’t be perfect, but at least we feel grounded in starting off.
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As one of our friends said, “Deciding whom to marry is the most important economic decision that you will ever make.”
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My fiancée and I have talked about money and our goals with it. Retirement, buying a house, saving for things, paying for the kids when we have them, etc. We have yet to open any kind of mutual accounts and may not until we get married, even though we live together.
The hardest part for us is to stop looking at money as “you have this, I have that.” I’m willing to combine and she’s hesitant. I won’t push her, though, I let her express her views and feelings. What I’ve done is given her a few examples of when it’s important that we’re focused on a goal and not making sure we both contribute the same amount of money. It’s helping her understand my viewpoint.
I would say the fact that we both have similar views on money, while saving a considerable amount every month with just student loans and car payments makes life a lot easier.
I’ve been comfortable talking about money for a long time with some of my friends, and I want it to be comfortable with my fiancée as well.
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Excellent post. My husband and I are also at the age where we’re seeing some of our friends’ marriages struggle, some due to money.
My husband and I have been married 9 years and we never formally sat down to have the “personal finance” talk. However, we have made it work, even though we struggled the first 5-6 years of our marriage financially.
A great follow up post would be about those of us who have remained married,and have had to figure out the whole financial thing together. *We didn’t even pull each others credit report until we had been married for about 5 years! Now we set a budget and are working toward financial freedom: NO DEBT!
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I definitely agree with the necessity of discussing this kind of thing with your future spouse. This kind of thing shouldn’t be optional, folks!
When I was planning my wedding (3 years ago) I was flabbergasted by some of the women posting on some online bridal forums. A number of these women would be less than a week from their wedding, and they would have their first talk about finances (or children, or goals, etc.) only then! Sometimes they would be so shocked by that their fiancé said, because they had never talked about money before.
Seriously? How can it not occur to people that these kinds of discussions are extremely important to a relationship? It’s not vital that two people think in lock-step and never deviate from each others’ opinions, but these issues need to be discussed, and compromises reached, if necessary.
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Baby boomers, nearly empty nesters. We didn’t discuss money, per se, before marriage but knew each other well, as well as knowing about each other’s family background. We agree that debt of any kind is unacceptable. We agreed to save for our goals of paying cash for everything, except our home, including cars, and to pay for our 3 children’s college education (at state university rates). Our basic precept about sharing duties, including financial management, is that whomever does it better assumes the job. I have more interest in the financial details, so I’ve done almost all of the budgeting, planning for saving, and executing the plan throughout our 26 year marriage. My husband is fully capable and I keep him informed and up-to-date but does not really want to take on the day-to-day management. It works for us.
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I convinced my girlfriend of 2 mos to start aggressively paying off her credit card. We dated thrifty, got married after about 8 mos (awesome wedding for much less than $1k) and merged accounts immediately (probably before actually). With both of us in school and then one and the other both working after a year of being married- after 2 years we paid off all of our debt (school loans and credit cards), fully funded retirement accounts and after 3 years bought a house and had our first child within a month of each other and soon after a 6 mos emergency fund plus saving every month with whatever is left.
The key to all of this has been communication and working together to decide what we really need, what we really want, what we can do without (including overtime now that our son is born and she is a full time mom and I would MUCH rather be home) and budgeting accordingly. I honestly don’t think we’ve missed anything- neither of us has had a nice new car and both are looking forward to some day saving up to get one; same with new furniture, etc.
So for us the key has always been communication and willingness to work together toward common goals (good communication helps us remind each other about those goals from time to time when one of us has an urge to diverge).
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We talked about all the major issues (money, kids, faith, living abroad, etc) before we got married. Now, we discuss money every month when my salary comes in. I’ve had more money-experience than my dh, and I’ve had to let go of the reins for about a year. We had some major expenses: wedding, baby, car, car accident, trip to his homecountry, his education, cost of utilities doubling. We have paid cash for all of them and our now quickly saving for our EF. They were some kind of ‘things to get out of the way’ before we could start saving and looking to the future. Now that dh has got used to having ‘money’, he has settled down and does not have the urge to spend anymore; now we can properly discuss everything money related. We are on the same page financially, I doubt if that will ever be a stumbling block for our marriage.
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One of the hardest things I did was tell my then-fiance (now my husband) how deep I was in debt. The debt was paid off before the wedding, and we paid our part of the wedding in cash (my parents helped) and also the honeymoon, rings, etc. I remember talking to other brides at the time, and they had never talked about money, kids, housing, etc with their fiance. They were focused on the wedding, not on life afterward. I was flabbergasted!
He tracks the money and pays the bills- I have no patience for the little details that he cares about. We use free open source software for this purpose. We have weekly discussions about our money situation. He’ll call me to see the latest projections or line items on the software, we can talk about them, and make very short term goals from there. Last year we bought a house, and money since then has been tight; did a refi this summer and we’re still playing catchup for finances. The software shows that our net worth will be trending downward into debt territory unless we make changes now. Since we talk about finances often, we don’t have to wonder where the money issues are coming from, and can adjust quickly to stay on track. The one thing I wish we would do is create longer-term goals for our money; he doesn’t have a lot of interest in that.
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The comments on that article at the Times website scared the bejesus out of me. There were so many people saying terrible things about their former marriages! I’m not at the point in my relationship with my boyfriend where it’s time to have that talk, but we have a good feel for each other’s general attitudes and luckily we are similarly debt-averse. I emailed myself the article and I think I’m actually looking forward to the time when we’re ready to plan it all out as a pair.
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I don’t think it is quite right to describe the sorts of problems being described here as money problems. I would describe them as spiritual problems. A lot of us today don’t have a clear idea of why we are here and where we are going and how we need to behave about all sorts of things (including money, to be sure).
I don’t mean to suggest that the money problems described are not real problems. They are real. My thought is that solutions dealing only with the money aspects will treat the surface only. We all need a spiritual center and it is a mistake to think that we can get the money side of our lives right without addressing that need.
The good thing about having money problems is that it can force us to figure out what is wrong and that can bring us in time to dealing with the spiritual issues.
The story set forth in the blog entry describes a shocking and yet common (today) state of affairs, I fear.
Rob
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I would say that talking about money and goals is as important of a conversation to have before you get married as whether or not you both want to have children.
A lack of communication, common goals, and honesty about money was the ultimate downfall of my marriage.
It is important to define terms like financial security – what makes one person secure can be no where near enough for the other. Do your materialistic goals (home, cars, vacation) orbit the same reality as your financial present and financial future.
When we started out we spent what we made a got ourselves in a lot of debt. When we both realized there was a serious problem we decided to correct it. This is where we differed on discipline and commitment to our goals. My spouse couldn’t change his lifestyles and was lying about paying bills and spending money. Nothing pulls the rug out quicker than having your spouse lie to you. Financial infidelity I believe is the most damaging thing that can happen in your relationship
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We discussed our money goals when we were dating. His goal was to be very wealthy. Mine was to be comfortable.
We are both savers, but I would like to spend a little more now rather than squirrel away everything for retirement. He would feel more comfortable saving everything, but understands my need to live life “in the now” as well as save for retirement.
In terms of risk, he likes riskier investments while I tend to stick to more conservative ones. So in general his returns have been greater than mine, but his losses have also been greater.
Even though we are different in many ways, I still find that we are financially compatible. The key is communication. We understand our differences, and understand the motivation behind our feelings and respect those differences.
I think marriages fail because communication is lacking and financial events come as a surprise.
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We had a prenup talk, but no money talk. I just assumed we were both doing fine financially, and that he’d pay the bills just like my dad paid the bills in the house. As it turned out, my husband did not have the best credit and routinely forgot to pay bills. After having to turn the internet on agai for the 3rd time, I basically said “Give me all the accounts and all the passwords, I’m doing this from now on.” I hated it – I didn’t want to be the family accountant or bill payer. That was the man’s job! (as I saw it from how I was raised) But, I did a much better job than he did; it was just my strength and his weakness. So now the bills are paid on time, we’re on a budget that we keep, mostly, LOL, and both our credit scores have improved because of it.
If we’d had a talk early on, we could have avoided that money mess. Luckily there was no real fighting involved in solving the problem, just a realization of who’s better at the task and putting that person (me) in charge of it!
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My husband and I dated for nearly 7 years and have been married the past 4. We used to keep finances very separate – one joint account for household expenses and the rest in our own accounts. The bills were always paid, but we weren’t saving anything and still had individual credit card debt. Both of us had terrible experiences in former relationships with sharing money.
It wasn’t until the financial crisis last year that we sat down and looked at our financial portfolios. It was embarrassing and uncomfortable (one of us had a balance on a credit card at 30% APR!) Since then we drafted a budget and began slowly merging money together. The first half of last year we paid off nearly $10k in credit card debt! We also started a very small savings account – something we never did before.
My advice to married couples is that it is NEVER too late to make changes. And also, if you want to merge money do it at a slow pace, but with momentum. My husband was very resistant to the idea of merging money. We set small goals of paying off debt and once he saw his credit score shoot up he was hooked. Now we are taking even more steps, like auto bill paying.
I also had a similar experience with LK – my husband is wonderful about fixing things around the house and taking the dog out for walks, but he is terrible at paying bills on time. Taking over bill paying is something I am not thrilled to do, but as LK said it is about taking advantage of strengths and this is mine.
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First, I would like to say that my husband and I celebrated our 26th wedding anniversary in August. We did not discuss finances before we got married because at that time there was very little money to talk about. Most of it went to student loans and rent. We both came from families that were struggling with their own finances…his parents were going through a divorce and mine were facing foreclosure. I think these situations have played a huge role in our lives today. It took us several years and many heated arguments to get to the place we are today:
We have 3 checking accounts – his, mine and one for his business traveling expenses. We also have 4 savings accounts. We simply split up the household expenses and savings. My husband does make substantially more than I do so he covers more from his checks, but everything gets paid timely and we have managed to save both for our children. We have two girls – ten years apart. We have mananged to send the older one to college funding her education 100 percent (this was a goal that we both wanted to do for our kids, since we both believe in it and paid for our own educations). We still save for the younger child’s education and manage to save for our retirement. Having the two accounts gives each person a sense of freedom. We have three rules that we adhere to – we pay the bills on Thursday – before the weekend fun, we pay ourselves first (automatic savings) and any item over $150 we consult each other.
I think talking about finanaces before you marry is beneficial, but I also believe you need to have a partner that seems to want the same financial values and respect. I think a lot of it boils down to that you have to start talking about it. At first it was really, really hard for my husband and I to talk about money without fighting, but if you keep at it we found that it does get easier. Communication…who knew?
I have to admit my husband has always been way more financially. Within the last two years have I changed my attitude about money. My only regret is I wish I was more open minded about money earlier in my life.
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My partner and I have been together for seven years. We’ve never had a planned, sit down talk about money because it’s always been part of our daily conversation.
We’re lucky that our “ancestry” here is very different but leads us to the same goals. I grew up in a poorer family that was always worried about money and began to worry about financial consequences very early in life. He grew up in a comfortable, upper-middle class family that was very frugal and smart about money.
I think the key to our success has been constant, open communication and understanding that we each have different financial strenghts and weaknesses, but not blaming the other person for that.
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Automating can minimize conflict about money management.
We automated *everything* – the debt payment snowball, then the savings snowball. We used automatic bill pay or automatic transfers to manage most of our debts and savings. Once we agreed on how and how much we’d pay down our debts or build up our savings and once we’d gotten everything on autopilot, there was nothing financial to argue about on a day-to-day basis. More time to celebrate paying off particular loans or hitting financial milestones.
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We never had a formal, sit-down talk about it, but we were always reasonably open about it, at least to the degree appropriate to the status of our relationship. By the time we were engaged, we were making joint decisions about saving for the wedding and such.
We did not live together until after the wedding, at which point we agreed on a division of bills. It wasn’t until a couple years later that we got serious about our finances.
I still wouldn’t say there’s one person in charge. We have an agreed-upon budget, and as each paycheck comes in that person sits down and does whatever is required from that check. The budget actually HELPS us communicate about our finances, since we can see everything in black and white.
I’ve got to say that it definitely helps that we are both savers by nature. We’ve never felt any need or desire to hide anything because there’s just nothing to hide.
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My ex-husband and I did discuss money in detail before we married, but it didn’t really help for various reasons. Divorce ended up being a good thing for me financially because I was then able to decide what to do with money I earned for myself AND follow through.
When I remarrried, my husband and I also discussed money — even more thoroughly than we had I our previous marriages. We both knew exactly what we did and did not want, and set up a mixture of joint and separate finances accordingly.
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Wow! Mike’s story is identical to mine. Even after alimony and child support, I have a surplus each month. As much as the divorce hurts, I’m very pleased that financially things are improving for me and my kids. I’m still dealing with the foreclosure, and that will unfortunately impact my credit for years. But that’s a small price to pay to get my financial (and emotional) life back on track.
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Good post, JD. I really liked that narrative at the beginning. This post hits all too close to home for me. My on/off boyfriend and I are on/off mostly because of finances. We both got ourselves into debt quite early in life (I am early 20s, he’s late 20s now), and while I am determined to pay my debt off, he is much deeper debt and in a lot worse position. We’ve known each other for 5 years and we lived together for a year but haven’t been living together since May. I’m the “let’s make longterm plans” type, and he’s “let’s live day to day” type, and a large part of it is because he has never managed his money properly. It’s really depressing. Nothing I’ve done so far has motivated him enough to produce a consistent effort to get his life in order. When I tried to get him to think about the future, he has a crisis and moves out.
Money is absolutely huge. Whether we like it or not, it controls our lives if we manage it poorly. In my case, I am trying to focus on myself and getting my finances in order. I don’t want to spend the rest of my life in debt, and his reluctance to get his stuff figured out makes it extremely hard for us to have a healthy relationship. Do we get along otherwise? Sure we do. But the huge money problems overshadow anything else.
I am so glad we had money talks before marriage. With his attitude it’s not like we’d be getting married anytime soon anyway, but I am a lot happier to find that we might not be financially compatible BEFORE we’re legally bound to each other.
I don’t know what the future holds, but I do know how miserable it is when you have no money. So I highly recommend having your financial goals as a couple in order BEFORE you tie the knot….
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I wish someone had taught me about finances before I married when I was 22. I went from my dad handling all my finances through college to thinking my husband would handle them. We both worked at decent paying jobs, had seperate accounts and each had certain bills we were responsible for. We never talked about money before or DURING our marriage. It was way to late before I learned that we were living a lifestyle we couldn’t afford. After 6 years of trying to keep up with the Jones we divorced. All I had to show for it was a freezer and half of $30,000 of debt.
Unfortunately, I didn’t learn my lesson and shortly after my divorce ventured into a business with a friend where my decent credit score was obliterated and I am still paying on back taxes that I owe.
I recently married again to a man I have been involved with for 5 years and from the very beginning have been honest with him and he with me about finances. Before we even thought it was a serious relationship he knew my credit transgressions and I his. He works in the mortage industry and helped me educate me on what I needed to do to fix my problems and I made sure that he followed through on fixing his. Discipline was something he lacked. We agreed that I would handle the finances but I regularly update him and he has access to all accounts and statwments. AND I regulary talk to my kids about finances, budgeting and money. I don’t want them to be as naive as I was.
@ #2Kate: My husband and I also set up a joint account to handle household finances and each maintain seperate accounts for our individual fun stuff. I work on salary and he on commission. We determined a set percentage of each paycheck to contribute to the household account. I have two kids from my previous marriage and all of their expenses (medical, dental, school, sports, daycare) are split with their father. My husband and I agreed that my half of their expenses are considered household and are paid from that account. Sometimes I pay for some of the more frivolous stuff for them from my personal account. My husband is fine with everything since he loves them like his own and since for the first time in his life he has a small emergency fund, he is contributing to retirement, and we are taking care of his previous credit transgressions.
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my husband and I lived together for decades (waiting to marry until gays, too could get married — I didn’t want special privileges) but I still remember the first weeks we were living together and he said,”Should we get a joint checking account?” I nearly freaked out — my old school feminism kicked in and I said no, no, no… And, DH was actually fine with that — we had both been running our own lives before we moved in together, and we found it easier to run a joint life together without becoming joined at the financial hip. During that time, we bought a house together, made wills to protect each other if death intervened, etc. We did decide not to have children — maybe that would have been a different situation.
And I still think I was right (though a few years ago when we finally did get married we opened a couple of joint accounts, partly to ease bill paying). While no one wants to think about the end of a relationship, women need to be especially careful about maintaining their own economic life, and their own knowledge about their economic situation, so they aren’t negatively impacted by a divorce or death.
Also, I think the decision to not join our finances meant we didn’t fight about money the way some people do, even though at times each of us had to shoulder more of the support of our shared life, and each of us, I’m sure has from time to time made decisions the other one wasn’t totally thrilled about.
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My husband and I grew up together and had dated for 4 1/2 years before we were married. The majority of our engagement was spend long distance because of college, but it gave us A LOT of time to talk. We went through a very thorough pre-marital counseling workbook together that included a chapter on finances, which I highly recommend. We established our financial goals before we got married and merged our finances. Like the couple JD referenced, we are “living like paupers” while we pay off the car and $30,000 in student loans and save for a down payment on a house -all of which we plan to have done by our 4th anniversary (we have 1.5 years under our belts). It isn’t always easy or fun, but it is wonderful knowing that we are both making sacrifices for SHARED goals and priorities .
As far as day-to-day finances, all income goes in to a joint savings account which automatically directs funds to Roth IRAs, savings and bills. Our budget is set up to be monthly but I get paid every other week, which means that twice a year (May and October) there is an “extra” paycheck. Those checks are equally divided in to our personal “allowance” accounts for whatever we want. It has worked out great for us because we never have to discuss/argue about his video game purchases or my clothing purchases because they don’t come out of the family account or affect our budget.
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My husband and I did not really discuss finances before getting married. We lived together for three years, and soon after the wedding we merged all of our accounts so that I could manage the finances better and create a plan to get out of debt.
I keep up with the finances. It works out well for us because I actually like doing it, and we have frequent discussions about where we are financially and our goals. Neither of us spend ridiculous amounts of money on Stuff, either, so we’re fortunate to be on the same page.
With my marriage, I wanted our finances to be an open book. We’ve never had an argument about money because we approach everything like we’re a team, both of us on the same side.
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I’ve been with my partner for 9 years, we have owned a house for 6 and we have a 4 year old son. We’re not married but we are each others heirs on everything.
We talk about money a lot, and we both came into the relationship with no debts and basically no assets. When we bought the house we opened a joint account & each put 50% of our paychecks into it, which was enough to cover utilities & mortgage, and we both saved for retirement & had some short-term savings for vacations & purchases.
Our issues have hit now, since we actually have assets to manage – my partner is really conservative financially. I am always pushing him to make riskier, higher-return investments (moving money from a savings account to a money market, from the money market to a mutual fund, etc), to give more to charity, to say maybe our emergency fund is enough and we can spend more.
It’s a good problem to have but it’s not one I expected.
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My husband and I merged our (admittedly meager!) finances even before marriage. Luckily, we are fiscally compatible. It has certainly made things easier for us.
You are to be congratulated for having a marriage that worked even when you and your spouse were very different in terms of money management. From what I have read, this is not easy to do!
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My husband & I will be married 22 years this Saturday. We didn’t discuss money before we got married and we have debt that we are now working on paying off. Nobody taught us about checking accounts or charge cards (got first one the year we got married). We just opened joint accounts before we got married.
Regarding the “ancestry” step, my parents never discussed money in front of us kids. In fact, they never discussed much of anything or argued in front of us. Their style was to sit down without us around as distractions & discuss whatever issues were on the table. Consequently, I didn’t have an education regarding a married couple’s finances. Now I’m reading everything I can about PF & sharing with hubby. I hope I can also pass some of this along to our kids so they can learn about handling money & finances.
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My now-husband and I never really talked about our spending habits before the marriage, but we did discuss our general goals in life and noted that we had similar spending styles. We also dealt with my husband’s tendency to gamble and figured out how to control it with accountability EARLY in the relationship.
Interestingly enough, the one thing we didn’t discuss was how we bring in our income; while dating, my husband had a tendency to quit a job in college if he didn’t like it (most of the time for good reason, like hostile work environment) because he had financial aid to fall back on. In the first 6 months of our marriage, he did it again – when he was the primary income earner as I was in grad school! It took him 6 more months to find a new steady job, and it was one of the most stressful things we’d ever been through. He learned a valuable lesson from it, though – make sure the next job is lined up before quitting! We also learned how we can be frugal (but not miserable) when the situation becomes necessary, as it has again now that I’m a pink-slipped teacher. =/
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My husband and I lived together for four years before we got married ten years ago. We didn’t have an explicit money conversation before we decided to get married (like we did regarding religion and not having kids). However, because we’d lived together for so long, we had figured out where we stood financially, and how to handle our combined finances.
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If evey couple had this discussion before marrying, I think the divorce rate in this country would be cut in half.
Invaluable advice!!!
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My husband and I discussed it before we were married. We were a bit older and established in our careers when we married (I was 30; he was 33) so we decided to keep our seperate accounts and each pay 1/2 the expenses.
Though our priest was HORRIFIED by this in pre-Cana counseling (He said we were essentially staying single financially). It worked very well until we had our first child and I stopped working for the first year.
We have finally learned to live on just his income and save mine (I work PT now) and are doing a good job amassing money in our savings to purchase a larger home.
I would also note that there was always transparency with the accounts because, after our marriage, all our accounts were made joint.
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I think you’re absolutely right – it is absolutely ideal to get on the same page before getting married. We did this in 2 ways.
1) observationally – we dated for 5yrs +. There was little question about how each other handled money. We were of course nowhere near as knowledgeable about money and relationships as we are now. But there were no big red flags
2) pre-marital counseling – The catholic church requires you complete this course, part of which involves money discussion. Our Priest told us that our views about money were extremely similar and we were one of only a few couples that really did not need to discuss it further.
Now, have we had issues with finances? Sure. Did we totally avoid debt? No. Are we perfect? Far from it. Are we heading towards a divorce due to finances? Definitely not.
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Mr. Sam and I had a money summit (we each came armed with our credit report, a list of debts and assets) before we bought our home together (which came before marriage). It was super romantic to trade credit reports . . . but it started the disucssion of how we each handle money, what money means to us, etc.
After purchase of the house, I took over paying the bills for all household costs. After marriage and after we semi-joined finances and read Total Money Makeover I took over paying all bills and managing our money including investments, etc. We have regular money discussions, about once a quarter and a big one at tax time and at the start of the year, but most of the time Mr. Sam is in the dark as to the specifics of the money (I think there are pros and cons for one partner to handle all the money chores).
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I’m with Rob Bennett. The money issues are only a symptom here, not the real issue. If he says “spend less” and she says “ok” but then goes off and spends like crazy, that is a communication and emotional problem, not a financial one. (Not to mention the infidelity you mention in the beginning).
They need a marriage counselor, not a financial counselor.
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Great post! I think understanding your fiancee’s attitude toward money is essential; I’m glad I did. We didn’t pull credit reports on each other b/c we had little debt history, but we did discuss money in detail. We still disagree about some things, but we’re unified on 95% of things.
The two best metrics to understand a person is the way the use their time and money. These two items show priorities, values, desires, goals, etc. Getting married without discussing finances is recklass at best and foolhardy at worst.
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Money is often an emotional issue, and a lot of financial advice has a basis in psychology. (Pay yourself first ring a bell?) Going to a financial advisor probably won’t help, but it’s not just a general communication issue. I could easily envision a couple who’s open about everything except money.
That aside, my spouse and I started talking about money shortly after we started dating. 3.5 years later not being able to talk honestly about money just seems preposterous.
We still have separate checking accounts as well as a joint checking account, and we have separate credit cards as well as a joint credit card. When we track our spending for the month we combine the info for all of these. This system works pretty well for us.
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My husband and I were together 10 years, living together for 7, before we married last year. We know each other’s money habits and they are absolutely not compatible. We fought about money instantly from the time we started dating; I remember calling him after a fight and saying let’s get this money thing hashed out or we’re going to keep fighting till we break up. That was the start down an ongoing road.
What has changed is we have each inched away from our extreme money positions toward the middle. I have lightened up and become less uptight and miserly; I know the importance of enjoying the present as well as preparing for the future. He has disentangled some serious financial problems; miserable credit, bankruptcy, bad IRS problems, and is on the brink of committing to paying off his credit cards. (Really, this is huge for him.) The way we’ve made it work is through communication. We talk about upcoming bills, planned purchases, income, etc. and we pay things in the way that works best, whether he pays it or I do. Given my somewhat better financial position, I pay for more things and I keep some savings. I no longer get angry when he buys things he doesn’t need, because it doesn’t help, and only stresses us both out. We are in much better shape than we started out and things continue to improve, and I am happy with that. And I am happy with him; what we have together is worth so much more than perfect finances.
So it seems to me you don’t have to have the same financial background, same attitude, even identical goals; what you have to have is communication and a commitment to make it work.
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I want to say upfront that my situation is an exception on every point.
Being open and talking about finances should happen before marriage and merging money. But even that is not a guarantee of avoiding a financial mismatch than leads to a disaster and/or divorce. In my case the spouse’s family habit of slipping money to him instead of him learning that it didn’t grow on trees set the rocky foundation. Other personality issues made it worse and he eventually isolated us from just about everybody.
Merging money in my case was a booby trap because it made it hard to follow even when he dropped keeping the books and I picked them up. We had weekly allowances but his always disappeared the first day and he whined that he was being treated like a child. whatever.
He was eventually hospitalized and I was able to stabilize things. But I got out and it saved my life and my financial future because I don’t have to be liable for his irresponsibility. It will take a long time to recover a decent lifestyle but it is worth it. I do not recommend taking this option without knowing all the ramifications especially if outside the money there is still a relationship. In my case there was not, it had died.
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I was offended when my husband suggested we look at our credit reports when we were first engaged. I had great credit afterall! But in retrospect, I now wish I had been smart enough at the time to suggest it.
We’ve never really argued about money because we’ve had the same goals and our spending habits are similar enough to avoid any resentment. Discussing (not arguing) what to do with EXTRA money seems to be the only time we really have to work hard to decide on priorities and come to an agreement.
Coming from similar upper/middle class backgrounds helped as well as we were raised similarly. My husband has always made fore than me but our money has always been “ours” and always combined into one pot. His attitude that he has 50% of the financial say in the marriage despite making 60-80% of the money has always helped immensely.
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Great article. With the combination of your blog and my frugal habits, I feel I’ve been able to openly discuss finances and the concept of STUFF in my girlfriend’s life.
This year alone, she’s moved into a cheaper apartment, cancelled Netflix, sold TONS of clothes, opened an ING savings account, created a budget and started an emergency fund.
She will certainly laugh at me when she reads this today
Thank you J.D.!
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I was extremely lucky to have the fiance and now wife that I do. I was in debt after college and lived outside my income my first year out of college.
After having the very difficult talk I made significant changes in my spending habits. We made choices to reduce spending on dates and other activities. We had premarital counseling which involved personality and financial discussions.
Finally, we merged our accounts once she left her last job as they required a certain bank for direct deposit, and I was set on using my bank due to the better features and lower fees. We now use computerized software via the internet to track all budgets and spending. There is complete transparency in our finances and thus nothing to hide as well.
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My husband and I had just gotten married (18 years ago) and were selling his small house and buying one together.The lawyer said he had to advise him, his rights, that he was basically giving me $25,000 by signing his name to the house sale/buy papers and if he wanted he could draw up new papers, in just his name. That was our first money discussion and, of course, he signed the papers but it was an eye opener and we still laugh about it. We are both frugal people, who grew up in working class families, and except for our mortgage, have never carried any debt.We were young when we got married and didn’t know anything about money, at the time, so lucky for us it has worked out.
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When it came to getting married my tendency to be very up front served me well. I am not the type to prevaricate or shy away from such ‘cold’ topics. We talked about kids and money and life goals. When I got married I had a few thousand dollars in savings and DH had a few thousand in debt. Before merging our finances I made it clear what I expected of him/us in the future (pay down debt, save money, etc). He was okay with that.
Of course that was in theory. Actually buckling down and DOING is another story. We had some problems with follow through. But since we had already agreed we were able to come together until I loosened up a little and he buckled down a lot.
Everything for us is combined and owned 50/50. But for each account one of us is primary and the other simply maintains veto power, otherwise what happens when we just plain disagree? We each make independent decisions about our 401k (though we both put in the same amount). I maintain our ‘conservative’ accounts (savings, checking, CDs, etc) and pay down debt. While he monitors our more ‘aggressive’ accounts (stocks, bonds, mutual funds, our rental). We negotiate which direction money goes based on our current situation at any time. We *agree* on everything not because we’re always of the same mind, but because we’re working on the same goals. If I think a stock is bad, he won’t buy it. If he wants me to come up with cash to buy a piece of furniture, I usually accommodate.
I agree with the posters that have stated that there was more going on than finances. Ultimately it MAY have been simply basing a relationship on the wrong things. A friend of mine was in a similar situation, but I can tell you he was with his wife for the wrong reasons. She was insecure and made him feel big and strong, but that insecurity is what led to the behavior that got them in trouble. ‘Kathy’ had a problem and I’d be curious to know if ‘Mike’ ever encouraged her to get counseling and if she ever went.
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