Financial troubles are notorious for being a leading cause of divorce, yet some couples find it a tricky subject to broach, even if they plan on spending the rest of their lives together. But a little discomfort could be worth its weight in gold, because experts agree that talking to your partner about money before tying the knot could prevent some serious marital problems down the road.
So what is it about finances that can turn love and understanding into unreconcilable resentment? Gabrielle Freire, a licensed marriage and family therapist, shares that a power struggle usually surfaces from disagreements in expenditure.
"Relationship-money issues are usually indicative of some other relationship problem," Freire explains. "[One partner] overspending their own money or their S.O.’s money (in a joint account) is what bothers most couples. It is an unfair behavior between partners, and could trigger thoughts about one person thinking they 'deserve' more than their S.O. It also puts one partner in more of a parental role, making them feel like they are the police of their S.O.’s spending habits."
Further, she adds that in some cases, the spouse who makes more money thinks they're entitled to make more decisions, throwing off the couple's equilibrium. Bottom line: If spouses aren't in sync with their spending, the result is feelings of betrayal, disrespect, and a questionable commitment to the goals and dreams they once shared together.
Planning to get hitched? Find out the essential money topics you should hash out first, according to a relationship expert and a financial guru. From divulging your debt to dreaming about your future together (and how to fund it), sorting out the most common culprit of divorce is like a form of pre-marital counseling.
Already married? Don't panic. It's not too late to have a candid discussion about your cash to keep you on the path of marital bliss.
Discuss Your Current Debt
After becoming engaged, it's time to take a cold, hard look at your debt, and have your soon-to-be spouse do the same. If your balances are high, don't freak out; instead, be glad you're taking the time to organize your finances before saying "I do."
"I find that so many clients feel embarrassed to talk about their debt, but they’re not alone," assures Marie O’Keefe, a CFP® Northwestern Mutual financial advisor. "In fact, according to a survey Northwestern Mutual just conducted with The Knot, 80 percent of engaged and married couples report having pre-existing or combined debt before getting married." She estimates that amongst her clients, about 50 to 75 percent have student loan debt, and about 25 to 50 percent have credit card debt. "Couples need to be open about these numbers because once they’re married, it’ll impact them both, especially when making a joint purchase like a house or a car."
She adds that if debt management is a concern, seeing a money pro is as practical as pre-marital counseling. "A financial advisor can help you create a plan to pay it off, a budget to not let it happen again, and provide you with consolidation and repayment options you might not have known about otherwise," she says.
Lay Out Your Financial Obligations
In addition to how much you owe, it's essential to be transparent about what you're paying (or what you plan to pay) in other expenses. "Couples should have a general understanding of each other’s current financial obligations, then align how you both want to manage those obligations once you get married," O'Keefe explains. "How much of your money is being allocated towards your rent [or mortgage], car payments, vacations, gym memberships, subscription services, etc., and how do you envision tackling those costs together once you’re married?"
Settle On Some Financial Goals (Both Short & Long-Term)
Another expert-approved way to sort out your financial priorities is to set some short and long-term goals together. "From fertility treatments, to your first home to retirement savings, it’s important to talk to your spouse about what you each value so you can get on the same page about your shared financial goals for both now and the future," O'Keefe points out.
Is starting a family your first priority? Does having an emergency fund help you sleep better at night? How about taking a dream honeymoon, buying your first home together, or, you know ... retiring one day? Being clear about your goals will help motivate you both, plus dreaming about your future together will make this talk a little more fun.
Promise To Stay Honest About Spending
According to the aforementioned survey, one in five people married in the last year admitted to hiding purchases and cash from their partners. "I find that many people hide cash or purchases from their partner because they feel guilty about spending money on something that isn’t a necessity," O'Keefe mentions.
Unfortunately, the repercussions of this kind of secrecy are beyond monetary. Freire points out that financial dishonesty can lead to trust issues in the relationship. "If you’re hiding money or purchases from your partner, you aren’t being honest and have broken their trust; when a person betrays their partner’s trust, that trust needs to be rebuilt slowly and over time," she says.
Be Sure To Budget For Fun
Amidst preparing for the bills that'll accompany a long and happy life together, don't forget to invest in yourselves — as individuals and as a couple — by setting aside some cash for fun. As long as your discretionary expenditure is within budget and you're both on the same page, this can actually help strengthen the bond with your partner and family. "Many couples, especially those with children, often feel like they have to sacrifice their hobbies and passions to save for the 'big things,' like purchasing a home or affording their children’s college tuition," says O'Keefe. "I hear this all the time from couples I work with; they cut out date night, vacations, and even cable, and doing the things they love because they think it's necessary in order to fund something else."
She continues, "This is when couples need to have a conversation about what is important to them, big or small, and choose to factor it into their overall financial plan. A partner may start feeling animosity towards the other if they feel like they can no longer enjoy the things that bring them happiness or explore new passions together. Whenever I’m working with a couple that feels they need to cut out the things that they enjoy, I always ask how it will make them feel one month, six months, or one year from today."