The business of marriage: Five things you should do before tying the knot

I'm at a friend's wedding this weekend, traveling with my own husband and kids. The wedding invitation labeled the event as a “triumph of hope over experience”. It is that, and I'm honored to be invited as a witness. But it's also a business arrangement, something I'm sure my friend (a respected economist) is well aware of. I haven't pried into the monetary details of their union, but I'm sure they've talked about it.

There are myriad good approaches to the business of marriage. J.D. often mentions that he and his wife, Kris, don't share finances. By contrast, my husband and I have completely merged our money: Both of our names are on every bank account, asset, and debt we have. We share every penny, and every decision about what to do with those pennies.

Whether you choose to go all in like we did or hold onto your independence, you live with your spouse's spending choices — for good or ill. If you have kids, they'll inherit the fruits of your shared financial life. And while research suggests money isn't as responsible for divorce as many experts believe, it can certainly sour goodwill in a relationship. Trust me on this one.

The really dangerous part is to pretend marriage that marriage has nothing to do with money.

Of course, that's exactly what nearly every aspect of our culture encourages us to do. I've never seen a romantic comedy about a happy couple who fall madly in love as their hands touch at the customer service counter and they realize they're cashing in the exact same rebate coupon. Lovers in literature don't stare deeply into one another's eyes and murmur sweet nothings about their checkbook balances.

In fact, we're taught to ignore the financial side of choosing a mate. Literature and popular culture are full of romantic tales of giving up the wealthy suitor for the poor beloved. Our language offers an array of derogatory terms like “gold-digger” to define someone who cares about their sweetheart's net worth.

But the bottom line is that we ignore the business side of marriage at our peril. The day my husband and I got married, the Commonwealth of Massachusetts legally merged our financial lives. Many states do this, assuming an equal sharing of assets and debts in a marriage.

You can create a prenuptial agreement that will define how assets are divided in the event of a divorce, but to do so you have to acknowledge both the financial side of saying “I do” and the reality that half of marriages end in divorce. Given how driven by romantic love most of our marriages are, it's perfectly understandable that most couples don't go to this extreme.

To set a good financial foundation for your future, here are five things you should do before you get married:

    • Know thyself. Before you share the details of your bank accounts with your lover, be sure you know them yourself. If you have debts, know the total amount you owe, and what interest rates you pay on it. Know where your assets are and what they're worth. Your intended should love you regardless of your net worth, but you'll both need to grapple with that number eventually. Better to be up front.
    • Know your partner. When you're both in a calm, happy place, sit down together and share your financial information. Try to be open and non-judgmental about your partner's financial history and your own. There's no need to feel guilty for being in debt, having more money in your savings account than your partner, or having a spotty credit history, but you do need to be honest. It might help if both of you can think of financial issues as just another challenge of a life together. You can embrace your partner's lousy credit and attempt to help him recover in the same way that you could support him in recovering from an illness.
    • Know your habits Even if you don't routinely track your spending, consider doing so together or separately for 3 months before you tie the knot. You'll get good information about your spending habits, and if you can share the information you'll both have a better idea of what you're in for and what challenges might lie ahead.
    • Know what you want. As J.D. so emphatically and elegantly says in Chapter 2 of Your Money: The Missing Manual, the path to wealth is paved with goals. You need to have some. Your marriage will be better if those goals are ones you and your partner create and pursue together. A lot of marriages suffer when couples discover several years in that their long-term visions don't line up. If you know your goals include homeschooling five kids, you'd better make that clear to your spouse. You don't want to find out his priority is staying child-free and sailing around the world in a hand-built sailboat after you've walked down the aisle.
    • Know how to get there. Even a single evening spent establishing financial goals can do you tremendous good as a couple. Better is to have a clear roadmap of how to achieve those goals. How much do you need to save to pay for that boat? How many years until one of you leaves the workforce to become a stay-at-home parent?

Of course, not all of life's big events arrive through careful planning. But laying out a path lets you live and spend with intention from your first days together. It also gives you more flexibility to handle emergencies and surprises as they come up.

For tips on how to keep communicating well throughout your years together, read my earlier article How To Talk With Your Spouse About Money. Starting off well will pay dividends in joy and wealth for your whole life together. That's a wonderful wedding gift for the person you love.

One little postscript on weddings: You'll be married for much longer than you'll be enjoying your wedding cake. If you can, sail off on your honeymoon with no wedding-related debt.

My husband and I eloped together over a long weekend in Vermont. I think the entire project set us back less than many couples spend on invitations. Seven years later, we're still happily married while we've watched couples who got hitched in more style split up.

Do you have any pre-wedding tips or additional ideas on what you need to share based on your own experiences? We'd love to hear them in the comments below!

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