Managing Money Before You Get Married

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By: Tracy Cooper Special to the Boca and Delray newspapers
With Valentine’s Day just passing and tons of new engagements flooding social media, we asked Tracy Cooper, Certified Financial Planner, Director and Southeast Division Sales Performance Manager for Merrill Edge, how to have those often difficult money conversations before tying the knot.
1. What types of discussions should newly engaged couples have regarding finances and planning?
Here are some conversations you should have as newlyweds before the wedding:
Decide how you will manage day-to-day banking needs
Chances are you’re coming into your marriage with separate accounts to deposit your paycheck and pay your bills. Before the wedding, consider having a conversation about how you will share financial responsibilities or if one of you will exclusively manage your day-to-day finances.
Discuss financial goals
It’s likely you already talked about where you’d like to live, if and when to start a family, dream vacations you hope to take and when you might like to retire. Together, you should discuss these long-term goals and establish a financial plan so you can pursue them as a couple.
Understand each other’s spending habits
It’s easy to get caught up in wedding bliss and excitement, which is why a budget is critical to help you monitor your spending and savings habits. For couples, a budget can also help identify differences in your financial personalities. Work with your future spouse or partner to create a realistic shared budget you can follow in pursuing your financial goals while respecting your different approaches to money.
Know your credit scores
Knowing your future partner or spouse’s credit score and payment history can help give you a good idea of his or her fiscal responsibility, and whether it will be easier or more challenging to apply for credit once you are married.
Plan for financial security
While an emergency may seem unlikely – especially when you’re planning your happily-ever after, and retirement may be decades away, it is never too soon to plan for the future. Starting an emergency fund early in your marriage may have a big payoff in the event you need to take care of an unexpected repair or medical bill.
2. How do you suggest couples bring up discussing finances?
It’s unrealistic to think you both will have the same values about money, so don’t worry if you have different perspectives or approaches when it comes to finances. As with all aspects of your relationship, it’s important to keep the lines of communication open to lay a strong financial foundation for your future as a couple. And remember, nothing’s set in stone. Your financial goals will change as your life together evolves. Major life events like a new job, having a child or moving to a new city can all have a major impact on your cash flow, so be sure to discuss your goals often.
The most recent Merrill Edge Report found the only person the majority of Americans (54 percent) are comfortable discussing their retirement savings with is a spouse or partner. However, starting and maintaining these conversations surrounding financial goals can be difficult and, at times, daunting. If you’re having trouble, or don’t know where to start, involve professionals in the conversation. A financial professional can help facilitate a conversation about your finances and help you outline your goals and a strategy to pursue them together.
3. Do you find that couples are merging their bank accounts or keeping them separate?
Every relationship is unique, so create a strategy that works for you and your spouse or partner.Some couples decide to keep their finances separate, while others merge their accounts when they get married. Another option is to have three accounts: mine, yours and ours. With this approach, you may use the joint account to pay shared bills, and maintain some financial independence through your personal accounts.