Getting Married? Get the Money Figured Out First!
Money issues have ruined countless marriages. But, with careful planning and frank discussions, you may be able to avoid the fate that has plagued so many. Or so says Ohio State University research scientist Jay Zagorsky. As an economist in the university's Center for Human Resource Research, with nearly 40 years of research to back him up, he set out to see why so many husbands and wives see finances differently. Here's a sample of what he found:
- Husbands typically think the family income and wealth are greater than their wives think they are.
- Wives think the family debt is greater than their husbands think it is.
- Both husbands and wives tend to think their spouses earn less than they say they do.
- More Money = Less Fights
With that in mind, we're giving you 11 topics to discuss BEFORE you get married. Why 11? Because most lists go to 10, ours ... goes to 11. Which makes it better.
- Understand your credit philosophies. Do you agree on when to save and when to spend? What financial priorities do you have as it relates to running your household? Get a handle on these items first and understand your compatibilities and your willingness to compromise on your incompatibilities.
- Budget. Do this together and make it realistic. What items can you afford on a monthly basis and what items will you consider to be windfalls or luxury items?
- Get your debt under control. Give your future spouse a good foothold on your married debt by cleaning up any prior issues before they become part of your joint household.
- Manage your cash reserve. Set a target goal of two months salary to cover unforeseen circumstances and minor emergencies.
- Save together, with a joint investment strategy. Have a frank discussion about each of your tolerances for risk. Set a plan in place that addresses your long-term financial goals and seek the help of a professional advisor if you're unsure. It's advisable to review your plan annually to give you the ability to assess your current risk tolerance and make changes to your plan, if needed.
- Have an insurance plan. What types of coverage do each of you want or need? Assess your overall plan for insurance and have a discussion about the importance of insurance to both of you and your current or future children.
- Discuss your career plans. Are you on a lifelong career path? Is your future spouse? Have a talk about your current employment and your career aspirations. Be honest about things like relocation and additional education that might be necessary to help you reach your goals. How will you plan and pay for that?
- Determine housing needs, now and for the future. Where do you want to live? How do you want to live? Determine your needs and desires for housing now and in the future.
- Talk about your tax filing options. Marriage presents options for you and how you pay your state and federal taxes. Discuss these options with your future spouse and then talk with a financial advisor.
- Make an estate plan. That means a will, perhaps a living will, and possibly other items such as a trust for your current or future children.
- Talk about the economics of healthcare. It's never too late to address items like disability, a health care power of attorney and durable power of attorney.