It's wedding season, and planning and preparing for the big day comes with excitement, not to mention arguments and compromise -- often about money. Many couples spend lots of dollars and hours securing just the right caterer, venue, and honeymoon location.
But if planning the merger of two lives is no small feat, it's also important to plan for what your financial lives will look like after the honeymoon is over -- and that's something you'll want to get to before the I do's.
By implementing these three nuggets of pre-wedding financial advice, you'll keep the marital arguments to a minimum and the newlywed bliss alive and well.
1. Honestly Discuss Your Financial Pasts.
The goal of this discussion is to truthfully disclose everything. Tell your significant other about your income, assets, and all of your debts. This is the time to air your financial secrets. Be careful to avoid letting it devolve into a lecture (or argument) about whose money management methods are better.
Use these conversations to listen without judgment, learn more about each other, and connect with your betrothed. No decisions have to be made about how to handle any of these issues. Right now, it's more important to disclose your past and understand your partner's, and open up the lines of communication, not shut them down.
2. Talk About What Type of Person You Are When It Comes to Money.
It's likely that one of you is more of a spender, the other more of a saver. If so, These "permitter" and "restricter" archetypes will reappear hundreds, maybe thousands, of times over the course of your marriage. For a more harmonious union, both partners will have to compromise when it comes to money matters. Through that compromise, you'll be able to develop a game plan for how much to save, how much to spend, and how much to contribute toward goals like buying a home and securing your retirements.
3. Craft a Road Map.
Talk about your financial goals. Discuss how you'll construct, manage, and monitor your household budget. Determine if you want to commingle your assets and incomes or keep them separate.
Many couples choose to keep individual accounts and create one joint account for shared household expenses like rent, utilities, and groceries. Other couples commingle all of their income and have separate "fun money" accounts where they receive a certain monthly "allowance," say, $100 per month, to save or spend however they'd like.
Strongly consider a premarital agreement (a prenuptial contract), especially if one partner is coming to the marriage with significant assets or debts. Even though this can be an awkward discussion to have with your betrothed, a mutually agreed-upon plan will squash any misunderstandings or nasty situations later on. Have the agreement drafted by a lawyer, sign it, put it away, and hope you never have to use it.
Congratulations Are in Order
Having these conversations before you walk down the aisle will make life much easier once you're married. So carve out the time to focus on your finances now. It certainly isn't as exciting as planning your honeymoon, but your marriage will be so much better off for it.
3 Money Topics to Discuss Before You Walk Down The Aisle
Mindel says hiding details of an inheritance or trust fund is one of the most common lies he's seen in clients.
It's not a wise move, especially since it's easy enough for a partner to find out if they pay attention to your tax returns, Mindel points out.
Unless you also plan on also lying to the IRS about the trust fund, you'll have to report your monthly checks with the rest of your taxable income.
A California woman made headlines when her ex-husband sued her over lottery winnings she hid from him while they were still married.
Years later, he took her to court and wound up walking away with 100 percent of her earnings.
"Now, more and more states across the country are imposing penalties for spouses that fail to properly disclose financial information to their spouses," Mindel says.
If you've got money that's off the books, such as cash you're earning from a freelance or part-time job, it's not OK to stash it in a secret account your partner doesn't know about.
"People get pissed when they find statements about hidden accounts," says family law attorney Jennifer Deniger.
"A lot of married couples don't understand the concept of joint property and they think that if they get divorced, then anything they have in a solo account is theirs to keep. But the joke is on them because the [spouse] still gets half."
Lying about job loss often occurs because spouses are either ashamed of their failure or are convinced they'll be able to nab a new gig before their partner notices.
"We don't see it very often, but you hear about people that are shocked to hear that their spouse has been covering up a job loss," Mindel says. "They leave early to go to work but don't have a job to go to."
Mindel says any vice that sucks up disposable income -- like frequent casino trips or betting at the race track -- is a danger to marriage.
"We've had women [clients] who've been addicted to male strippers and spent all their money on clubs," he says.
"They end up putting financial pressure on their families because of their addiction."
Partners often hide credit card statements or past debt from their spouse, telling themselves that they'll be able to pay off their debt before it balloons.
"I find that most people have no idea how much their partners have in student loan debt, so that can be iffy when the payments need to come out of your joint income," Deniger says.
Before you tie the knot, sit down and exchange a credit history with your partner, Mindel recommends. That way, you're both on equal footing.
If you're uncomfortable coming clean about your debt, you're probably better off putting off marriage altogether.
Couples should treat marriage like a business merger, Mindel says, especially if you're planning on drawing up a prenuptial agreement.
"You've got to know the value of both companies," he says.
Plus, if you ever get divorced, a court can penalize you for not disclosing your full income and award your ex more spousal support.
If you've got kids you're not telling your spouse about, you could end up in court or worse -- jail, says Money Talk Matters CEO Taffy Wagner.
"I know of a situation where a husband did not tell a wife that he had previous children and was not paying child support," Wagner says. "The [new] wife ended up being sued because they had a joint account."
Andrew Scharge, founder of Money Crashers, says this is an especially easy lie for a stay-at-home spouse, who can cover up bill collector mail and phone calls.
"The difficult result is the loss of their home, which will come as a shocking surprise to the spouse who was unaware of their financial situation," he says.
"It can be a challenge to deal with a lying spouse, but ultimately, if the couple does not deal head-on with these issues of trust by implementing some money management tips for married couples, the couple will very likely separate or divorce."
Compulsive spending habits can wreck a marriage, especially if they're kept under cover. Some partners go as far as to send shipments to friends' houses or the office as a cover-up.
"Compulsive spenders lie about the amount of money they spend, how often they spend money and what they spend money on," says Paul Hokemeyer, a licensed marriage and family therapist.
"It destroys relationships because the non-spending partner typically has no clue over the extent of the spending that's going on and wakes up to a bankruptcy or unmanageable debt that in turns makes them feel betrayed, taken advantage of and humiliated."