When two families join forces, “there’s a financial implication around every corner.” Compounding these complex family dynamics, many couples start their marriages with unequal resources and very different attitudes about spending. If one person is a saver and begins a relationship with a spendthrift, the potential for strife is significant. With children in the mix, the conflict is magnified. If a blended family does not have a well-established mechanism for healthy communication, problems may arise.
If you think you have found your prince or princess, it is a good idea to be certain that both of your beliefs and habits about money align before marrying:
- During the dating period, determine if you both have the same values when it comes to money.
- Observe the other’s actions: Do they live within their means, and what are their spending habits like? Ask your partner or fiancé questions such as, “Have you ever created a financial plan or a budget?” and “Do you have debt?”
- I also recommend that you share credit reports with one another, and consider discussing prenuptial agreements. Maintain your own credit by having separate credit cards and bank accounts.
- There are many benefits of having a prenup: it provides a framework for how to organize a family’s finances, protects each partner from the other’s debts, and defines assets that belong to each of you prior to marriage, which could protect claims on assets that would otherwise pass to children from previous marriages. If you have your own business, the agreement would protect your ownership should the marriage dissolve.
- If there are children in the mix, couples must consider the future of their respective assets. Is a certain amount allocated to children’s college funds? Or will money be set aside for future children? How will you want your inheritance to be divvied up?
There is no doubt, conversations about money and legal arrangements may be uncomfortable and tense. But consider them as preventative maintenance. Choosing a fiscally irresponsible mate is hazardous to your finances and your relationship.
It is important that both spouses are involved in all the financial decisions. Work with a financial adviser to understand how your family’s savings are being invested, who values your opinions and encourages you to participate in the decision-making process.
Many of the above topics are covered in Cinderella’s Guide to Financial Independence, the appendix to Prince Not So Charming®, by Kathleen Grace, CFP®, CIMA®, and Managing Director at United Capital. Read more about Kathleen’s book here.