Love is in the air in June, a popular month for weddings and engagements. But before you or a loved one says “I do,” there are a few things you should know about their money habits.
Thanks to an excellent new book by Terry Savage, Gemma Allen and Michele Lowrance, the bottom line is that you need to know some specifics about the financial behavior of your future spouse or partner before you tie the knot or set up house. Here are four key questions from The New Love Deal:
* Are You or Your Partner a Spender or Saver? “It’s time to figure out just who you are when it comes to money decisions and who your partner is. Are you a saver or spender? Extreme or moderate?
Do you pay bills the day they arrive, once a month or when you get to it? Do you track balances or assume all is OK? Do you pay your credit card in full each month or carry a balance? Do you review investments at least once a year? Do you rely on experts or are you a do-it-yourself type?
Are you comfortable carrying debt, or do you insist on being debt-free? What did you learn about money from your parents and how does this impact your feelings about money and marriage?”
* How Much Risk Do You Both Want to Take? “Talk with your partner about where you are now. Do you think you are a risk taker when it comes to money? career? love?
What is the most difficult type of risk for you to take – financial or emotional? What role do you think your parents played in your ability to tolerate risk? What role have your previous life experiences played? Do you think a discussion of risk and a respectful, persuasive argument for risk made by your partner could allay some of your fears in making a specific decision?”
* Dig Deep on Money Issues: Check Your Credit History, Review Your Assets and Talk about Estate Planning. “Share your past financial life. Remember your partner’s credit history will easily become part of your own report as you start a life together. Be prepared.
Each partner should make a list of all assets. Discuss retirement accounts, revocable living trusts, property owned prior to marriage etc. Make a plan. You don’t have to be wealthy to have an “estate.” Even young couples should have a plan. Know state and federal laws and put in writing how joint assets should be handled upon a sudden death of either or both partners.”
Being open and honest about money issues will go a long way in preserving and nurturing your union. I discuss all of our investing, tax, estate planning and bill-paying issues with my wife. We take our time with everything, Our estate plan took the better part of a year.
Through frequent and serious discussions on money issues you’ll avoid the subject that 70% of couples fight about. It’s best to untie a bundle of money concerns before they tie you up into knots.