As you plan your wedding, set aside time to be deliberate about discussing finances. Finances are one of the top 10 reasons for divorce, according to love and relationships site YourTango. However, money can’t buy love. Couples who find out they are financially incompatible (rather than just having a lack of money to begin with) are reported as more likely to split. Had they communicated better about money in the beginning, they might have avoided this little surprise. Forty-eight percent of divorced or separated couples and 29 percent of married couples wish they had spent more time discussing finances before they got married, a CouponCabin.com survey found.
What Is Financial Infidelity
Once you become engaged, disclose everything — your income, your assets, your debt and your attitudes toward spending and saving. Some say financial infidelity ends more marriages than sexual infidelity. A Today.com/Self.com joint poll found that 70 percent of women and 63 percent of men said financial fidelity is as important as sexual fidelity.
Financial infidelity happens when spouses hide assets, spend money in secret and rack up debt without telling each other. The National Endowment for Financial Education in 2011 found:
Almost 1/3 of Americans admitted to lying to their spouse about money:
- 30 percent have hidden bills
- 16 percent concealed a major purchase
- 15 percent kept secret bank accounts
- 11 percent lied about how much money they made
- Women age 35 to 44 are most likely to commit financial infidelity
Disclose Your Income and Assets
Until now, you might have respected one another’s privacy when it comes to sources of income and net worth. If you are going to spend the rest of your lives together, it’s time to disclose that information and get comfortable talking about the subject of money. What you should disclose:
- Annual income
- Credit score
- Debt
- Bankruptcy or other credit blemishes
- Savings
- Retirement accounts
- Life insurance policies
Set Short-term Financial Goals
In addition to sharing your financial scrapbooks with each other, create a plan for how you will spend and save money. CouponCabin suggests opening a joint checking account 90 days before your wedding day, so you can get used to pooling your money and sharing information.
Set up a plan for buying a house, if that’s a short-term goal. If one of you has an annuity from which you collect an annual or monthly stipend, companies like J.G. Wentworth will possibly buy it from you so you can receive one lump sum sooner that can be used for a down payment on a house, for example. Work with a mortgage broker who can take a look at your finances and recommend a lending plan that works for you, your partner and your joint goals.
How will you handle monthly household expenses? Who will pay for utilities, housing, groceries, etc.? Compare your employer insurance plans to see if one of you has better coverage and lower premiums.
Set Long-term Financial Goals
Speaking of goals, create a budget for expenses and savings. Intuit’s Quicken gets easier and more user-friendly with every update the company issues. It helps you to look at spending habits to set monthly and annual budgets. Revisit this annually — the best time is tax time — and look at how well you did or did not stick to your budgets. The more you talk about money, the less you will be likely to argue about it and allow it to divide you.