An open-ended conversation about finances is a crucial step on the road to marital bliss.
Marriage season is in full swing. Countless couples will step up to the altar this spring. Most will spend a lot of time imagining their blissful life together. Some will make an effort to see how they can communicate better. And a few brave folks will tiptoe into a discussion about each other’s finances.
If these couples knew that many of the fights they were going to have throughout their marriage would be rooted in money and their financial choices, they all might take time to discuss and foster financial compatibility right now.
Since spouses are going to share money choices and the consequences of their actions, it’s important to be on the same page. I’ve been fortunate to be in a lovely marriage for over two decades, but money has been at the core of many of our biggest disagreements.
We aren’t alone. Our firm has worked with thousands of families to help them with their financial lives. One lesson we’ve learned is that the way a couple makes financial choices tells whether their marriage will thrive or not.
Good news: It’s never too late to have an honest conversation about money.
There are three things you should absolutely discuss before you are married. (It won’t hurt to chat about them after the wedding, too!) But when you do, remember these important rules for talking about money. Don’t judge your partner. Don’t state your opinion as if it’s a fact. Try to see the other person’s perspective. And, most important, keep your emotions in check.
Here are the three questions you must ask one another:
1. How do you like to spend money? There is no right or wrong. It’s simply about preferences. But we can all have differing perspectives that can become frustrating over a lifetime together. Early in our marriage, my wife organized a ski trip for us for my birthday. I thought it was an odd present, given that she had given me something that was for both of us. I had grown up thinking a present was a material thing that was given to you. You can imagine she was put off by my tepid response! Some of us like and get more enjoyment buying material things — clothes, maybe, jewelry, or some new technology. Some prefer to spend on experiences, such as dinners or travel. The way you like to spend money will be a huge part of your joint life together.
Like most people, my tastes have changed over time. Today, I’d rather spend on experiences than things. In your marriage, you will both evolve and adapt, but having a healthy way to talk about your preferences will make your life easier (and make you feel more appreciated).
2. How do you feel about debt? How you view and use debt throughout your marriage can completely alter your future. Debt allows you to spend tomorrow’s earnings today, but it also reduces your financial flexibility once you have it. I grew up in Africa to parents who struggled, and I watched my mother drowning under bank debt. That has given me a massive (and perhaps not logical) aversion to debt. My wife grew up in California and was surrounded by people who borrowed; she herself has had a credit card since she was a teenager. When we had less in savings, I wouldn’t consider borrowing a lot to buy a nicer home, and I’d only buy cars I could pay for in cash. She wasn’t thrilled that for much of our marriage we lived in homes that were not as nice as we could probably afford. When you are entering a relationship you should clearly understand each other’s perspective on debt. It’s the one thing you will both have to be responsible for, together or not.
3. How do you feel about saving? Saving is all about delayed gratification; there is no immediate payoff. That sits well for some folks, but others really dislike it. For me, saving is like a security blanket: I like to know that I can pay off my house, lose my job, have a modest catastrophe, and we will still be okay. My wife assumes we don’t need to worry so much about bad things happening. Truth is, I do worry too much about things that are very unlikely to occur. It’s also true that saving more today means spending less now. You need to discuss how important building a safety net or saving for a new home is to each of you, compared to spending and enjoying that money today. Saving requires sacrifice, so you need to agree how much deferred gratification you can put up with.
Discussing money and what we do with it can be a touchy subject, and you will probably both have strong feelings. But being respectful of each other’s perspective and working together is necessary for a healthy and vibrant financial life. A discussion about money is the starting point (and most important part) of any real financial plan that works. These conversations should be the beginning of an “I do” that lasts forever.
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Joe Duran, CFA, is CEO and founder of United Capital. He believes that the only way to improve people’s lives is to design a disciplined process that offers investors a true understanding about how the choices they make affect their financial lives. Duran is a three-time author; his latest book is The Money Code: Improve Your Entire Financial Life Right Now.