“Finances have long been a trouble area in marriage,” says Julie Murphy Casserly, author of The Emotion Behind Money, “and the current economic crisis is stretching even more people to the emotional breaking point.”
In fact, in a pioneering survey conducted last year, one in three respondents admitted to lying to their spouses about money, leading to arguments, distrust, separation and even divorce. Experts agree that preventative action can save marriages. Before you walk down the aisle, take the time to understand your partner’s financial upbringing and philosophy, get up to speed on their past and present holdings, and lay the foundation for a transparent, co-managed financial future.
Together with your partner, complete the following financial checklist before you say “I do.”
Discuss childhood influences.
“You have to understand your partner’s money triggers, which goes back to childhood,” says Linda Descano, the chief executive and president of Citi’s Women & Co. In order to understand your partner’s money outlook—and your financial compatibility—you first need to understand how it was formed. Talk about parents’ saving and spending and habits and how they may have shaped your behavior. It is equally important to discuss your emotional connection to money, says Descano. Does it offer you a sense of self worth? Are you crippled by financial fears? Put it all on the table.
“The first time I married we did not talk honestly and consistently, and it was a messy divorce,” says Descano. “This time, when he proposed he had a W2 and a net worth statement.” She learned her lesson. Whatever you or your partner’s skeletons may be, it is better to know. Descano advises reviewing all major debts like education, business or home loans and significant credit card balances. Pull up credit scores from a site like annualcreditreport.com, and ask if they have filed for bankruptcy. Otherwise, you will likely be caught off guard when you attempt to complete a large purchase together.
Decide on joint or separate accounts.
One of the biggest and most practical questions new couples face is whether to separate or combine finances. Decide whether joint or separate accounts or combination or the two will best suit your needs. “Many couples find that if the husband and wife both work, it can make a lot of sense to keep separate budgets so that each has their own ‘buckets’ of discretionary income,” says Robert Stammers, director of Investor Education at CFA Institute. Dual-earners may keep a joint account for household spending or shared savings goals. If all accounts are joined, Stammers says it is especially important that they get and remain on the same financial page.
By Jenna Goudreau, Forbes Staff