So, you’ve either popped the question or said “yes”… what comes next? Wedding plans are likely to be on your schedule, but sitting down for a serious conversation may not be.
Talking about money may not sound romantic at all at this point in time, but getting on the same page about finances can help set your marriage up for success. After all, when it comes to planning a life together, it’s critical to have meaningful, brutally honest, and sometimes difficult conversations about real-life financial scenarios and how you’ll handle them side-by-side.
While your marriage vows may not include credit scores or asset planning, the fact remains that you are making a significant financial commitment to another person. Understanding your joint finances is crucial, so ask the money questions on this checklist before tying the knot.
1. Financially, Where Do We Stand?
Differing financial opinions are one of the leading causes of divorce, so it is essential to discuss money ahead of time. One effective way to do so is to sit down as a couple and make a list of all the debts and assets you’re each bringing into your marriage.
Start off with these questions:
- Do you have credit card debt?
- Do you have student loans?
- Do you owe friends or family members money?
- Do you have a housing or car loan?
- Do you have gambling debt?
- Are you in any other debt?
Gain a solid understanding of each other’s debts, and plan how you will pay it off, and by when.
Don’t forget to follow up with assets! Shed the light on your savings, retirement accounts and even investments. You may also want to go over your salaries and monthly expenses in detail. Putting all of the data down into a spreadsheet can give you a complete picture of your finances.
2. Should We Have a Joint Savings Account?
For many of us, money is a deeply personal subject, and the prospect of pooling your finances with a future spouse can seem intimidating. Many couples decide to open a joint account, but others prefer to keep their accounts separate and simply pay bills together. Do take note that a “what’s mine is ours” mentality doesn’t work for every couple!
You could, perhaps, do a combination of both — getting a joint savings account can keep the family’s financial situation transparent, and is much more convenient as all bills are paid from the same place; while still maintaining separate, guilt-free accounts for one’s own expenditure, small purchases or gifts for your other half.
While merging accounts works for some couples, it may cause complications for others. Whatever you decide, talk about it and ask each other the following additional questions:
- Who is responsible for which bills?
- Who will cover emergency expenses?
- How much money can each of us spend before we need to consult the other person?
Examine your thoughts and feelings about sharing finances vis-à-vis keeping them more personal and separate. Then you can get into the specifics of what bills or debt will be shared and what will be separate, as well as how you will each chip in towards your household’s financial responsibilities.
3. What are Our Life and Financial Goals?
In addition to being aware of your financial histories, it’s important to also look forward to your shared future.
Maintaining your individuality and independence is critical to a happy marriage. You’d want your partner to understand and support your goals, hobbies, and dreams. But what if those objectives are costly and drain away funds earmarked for the family’s needs?
Some people may envision themselves starting a business in the next five years, or going back to school to pursue further education. While one may aim to purchase and renovate a big family home, their spouse may prioritise eye-opening experiences more, with plans to travel and visit new locations each year.
Discuss your ambitions and dreams with your significant other, as well as how far you’re willing to go to achieve them. Share your short-term, mid-term and long-term financial goals — no matter how trivial they may seem! It will set the stage for open, honest communication about expectations and compromise in the future.
4. Do We Have Any Financial Obligations?
Personal net worth does not always capture the entire picture of a person’s financial situation and obligations. That’s why you should also disclose any other financial responsibilities you may feel that you have.
Here are a few questions you can ask yourself and your partner:
- Do you have financial obligations outside of yourself, such as supporting a child or running a business?
- Do you plan to take care of aging parents?
- Could your parents, siblings, or other family members need further financial assistance from you in the future?
- Do you want to have children together?
While the answers to these questions will differ from couple to couple, it’s helpful that you address them early on so there is a clear understanding of how to handle each situation as it arises.
Do pay special attention to the last question — raising children is an expensive undertaking! If the answer is “yes” for both parties involved, consider the costs of taking care of a little one over the course of 18 years, plus the expenses that may be incurred for their education or wedding.
Having grown up in different environments, both of you may have different ideas on how you want to raise your children. Here are some further questions about child-related expenses so you can iron out some kinks before embarking on the parenthood journey.
- How much will we spend to get fertility treatments or adopt if we have trouble conceiving?
- Will we be a two-income family, or will one of us stay at home with the kids? How will we decide who remains at home?
- When, and how, will we contribute to our children’s college fund?
5. Should We Sign a Prenuptial Agreement?
Prenups, also known as prenuptial agreements, are legal documents that state how marital matters will be settled in the event of a divorce. It is used to ensure that the division of assets is done in a systematic and cordial way.
In Singapore, prenups are not enforceable in and of themselves. However, we find that they provide a good reference point for couples to keep each other accountable. A prenuptial agreement can also be a part of the conversation on how to co-manage money, as a way to back up decisions you make about combining your finances (or not).
Prenups can be a sensitive topic, and may be regarded as offensive to even consider. Nonetheless, it shouldn’t be viewed any differently from an insurance policy for the worst-case scenario of any marriage. While it’s definitely something you hope you’ll never need to consult, it can offer peace of mind if something goes wrong.
By inviting your partner to have an open and mature discussion about the possibility of divorce (regardless of how unlikely it is), a prenup can allow a couple to learn more of each other’s expectations about the marriage and how they want to manage their relationship.
To read up on more reasons why you should consider a prenup, click here.
While every marriage will run into some conflicting financial opinions from time to time, starting your lifelong partnership with these questions will definitely help you get off on the right foot. It may be challenging to start the conversation, but just remember: by aligning your financial hopes and dreams, you’re paving the way to your happily-ever-after!
