Vast numbers of newlyweds face the reality of incredible changes that come with their new life together. Some of the greatest changes that couples face involve money.
Because money is one of the leading causes of divorce, marital success could well be determined by the financial rules and habits established early in the marriage.
Although this topic may seem humdrum, simple questions like "Who pays the car note?" are loaded with emotional charges that reflect one’s upbringing and definitions of one’s masculinity, femininity, power and self esteem.
To reflect on these issues, financial adviser Ric Edelman suggests that newly married couples spend time answering a series of 28 questions – first, independently, then exchanging answers to compare and discuss.
- How much and what kind of debts do you have? Make a list of all your debts, including the name of each creditor; amount owed each creditor, minimum monthly payment for each debt, when each loan will be paid off and the interest rate for each.
- Are you behind on any payments? Have you ever missed a payment? Have you ever been turned down for credit? If yes, explain.
- Has a creditor ever contacted you? If yes, provide details.
- What is your annual income?
- Do you plan to work full time until retirement age? If not, and if you are working full-time now: What changes do you plan to make, when do you plan to make them, what will it cost to execute these changes and how will you pay for them?
- Do you expect your partner to work full time until retirement?
- What percentage of the family’s total household income do you expect to contribute?
- Which of you will have the responsibility of paying the bills each month?
- How much of your income are you willing to devote to the household’s monthly bills? Express your answer in both a dollar amount and as a percentage of your income.
- How much of your partner’s income should your partner devote to the household’s monthly bills? Express your answer in both a dollar amount and as a percentage of your income.
- How much of your income are you willing to devote to savings and investments? Express your answer in both a dollar amount and as a percentage of income.
- How much of your partner’s income should your partner devote to savings and investments? Express your answer in both a dollar amount and as a percentage of your partner’s income.
- How much credit card debt do you think is acceptable?
- Would you be willing to use your income and assets to pay off the debts that your partner accumulated prior to the marriage? If yes, what percentage of your partner’s debts would you be willing to pay?
- Should your partner be willing to use his or her income and assets to pay off the debts that you accumulated prior to the marriage? If yes, what percentage of your debts should your partner be willing to pay?
- Do you plan to maintain a bank account in your name only?
- Does it matter to you if your partner maintains a bank account in his or her name only?
- Should the two of you maintain a joint checking account? If yes, should money be contributed to it by you, by your partner or by both? In what amounts, and how frequently, should you or your partner contribute? Be specific.
- Do you have a plan to obtain credit cards in your name only? If yes, how many and what should your total credit limit be?
- Does it matter to you if your partner maintains credit cards in his or her name only?
- Should the two of you maintain joint credit card accounts? If yes, which of you will use these accounts? Who will contribute the money to pay the charges on these accounts? In what amounts, and in what frequency, will these contributions be made? Be specific with your answers.
- How many children do you want to have?
- How soon do you want to have your first child?
- When your first child is born, will you or your partner leave the workforce to be a full-time parent? If so, for how long? Which one of you will do this?
- Are you willing to relocate to another city?
- Is it your intention to relocate to another city?
- If you got a windfall of a "significant amount of money," how much would that be?
- What would you do with that windfall? Be specific.
Don’t bother searching for the correct answers—there are no "correct" answers. What is important is that you and your partner’s answers match. Don’t be surprised if they don’t match at first. But, hopefully, your answers will not be so far apart that through discussion and compromise, you will be able to reach understanding and harmony.
What’s important is that you find a system that works for you. Edelman says you will know your system is working when you see these results: if the bills are being paid on time; you are not increasing your debts, and ideally, you are reducing them; you are saving money regularly; neither of you feels that you have been given undue responsibility for the family finances; neither of you feels that the other is failing to live up their financial responsibilities.
You will likely discover that you will have to change from the way you handled your finances before you married. Being married is a lot different from being single, and marriage will demand a tremendous change in the way you approach your personal finances.
Unwillingness to change can prove deadly to a marriage. If you are unable to agree on these questions, or if they provoke anguish, dismay or conflict, there may be serious matters plaguing your relationship. Newlyweds and those soon to be married are encouraged to work to resolve these issues.
New Rules For The Newly Married