Debt, savings, joint accounts: Are you talking about these topics with your future spouse?

engagement ring and jewelsBy Natalie Spott, AVP Branch Manager

Between Christmas, New Year’s, and Valentine’s Day, the winter months are one of the most popular times to get engaged. But before saying “I do,” it is so important that you and your future spouse have the full picture of your current financial situations and your future goals. 

Conversations about debt, savings, joining accounts, and budgeting can be hard. As someone who has recently gotten married, handling these topics is fresh on my mind.

The truth is that finances are one of the hot button topics that come up in marriage, and the subject can sometimes lead to conflict. But if you have a good idea of where each person is coming from and where you want to go, hopefully any issues that come up can be resolved easily. 

So ask yourself: Have you had these important financial conversations?

Important financial conversations to have before marriage

Do either of you have debt, and how will you handle it together moving forward?

If you or your future spouse is coming into the marriage with debt, you should be open and honest about it. Debt is not always a result of overspending or a habitual problem. Sometimes accumulating debt is just part of daily living and doing the best you can with what you have. But you need to talk about how you each feel about debt. If one person is passionate about becoming debt free, while the other is not, that can be a source of conflict. 

One piece of advice I have is to change your mindset about who the debt belongs to. Instead of it being just “your” debt, it should become “our” debt. Then you find a way to climb out of it together. 

What do you have in savings accounts, and what are your future savings goals?

Again, you and your future spouse should talk about savings openly, hopefully with the attitude that what each of you has individually in savings will become both of yours once you are married. Make sure you are on the same page about this. 

When it comes to planning how you will save for the future, be specific. Just having a savings account is not the same as knowing how to save and actually doing it. Be descriptive with details about what money you will put into savings and why you are saving. Being clear on the “why” is especially important.

Let’s say you are successful at saving for the first two years of your marriage but without a specific goal or reason. Conflict could arise. For example, maybe one partner wants to make a large withdrawal for a vacation while the other wants to keep saving for a down payment on a house. Many people find themselves in situations like this. They thought they were on the same page with their generic savings plan, but they never really dove into the details. 

If there are situations in which you would be willing to make withdrawals, know what those are. Do you make a small withdrawal from savings because you need a new outfit, or do you only touch it if there’s a medical emergency?

Will you keep separate accounts or create joint accounts?

Personally, I think all accounts should be joint once two people are married. That won’t necessarily mean you have to use the accounts jointly all the time. One account can primarily be for your expenses, while another is for your spouse. However, each person should have access and knowledge of what’s happening in all accounts. 

It may also be a good idea to have one person “in charge” of the accounts. This person may follow the accounts more closely, make payments each month, etc. This can be a much more efficient approach.

People bring into a relationship what they are used to in terms of how to handle finances. That means there’s no right answer, and you may have to find a way to allow each person to do things in the way they prefer. For example, maybe you like to always use your joint checking account, while your spouse puts everything on the joint credit card. Once a month, you can go in and pay off that credit card. Even if you are operating in different ways, your accounts are joint. 

Have you had a budget before, and how will you budget going forward?

If one person comes into the marriage having used a budget before while the other person has not, that could potentially be a huge source of conflict. I would suggest having the conversation to identify what your situation is as soon as you can. 

If neither of you are familiar with budgeting, it would be very beneficial to take a class, find a good online resource, or seek financial counsel to help you. Budgeting is a learned behavior, not something that is automatically understood. It’s not just about having a general budget, it’s about having a detailed budget that you know how to follow. 

For example, most budgets have a line item for “Entertainment.” But that could mean many things, and it can be different for everyone. Does it mean going out to eat or going to the movies? Or is going out to eat part of your grocery budget? Entertainment could include vacations, or that could be a separate line item. When you drill down and figure out all of these details, that’s when you will be successful with budgeting. 

Talking about finances will always be controversial. There’s no getting around that. But there’s also no getting around the fact that it is such an important topic for anyone who is engaged. Have these conversations now to make sure you and your future spouse are on the same page to help alleviate financial issues later on in your marriage.

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