Differences over finances is one of the most common issues that lead couples to split up — so make sure you and your future spouse are on the same page about money using this premarital checklist for financial harmony.
Differences over finances are one of the most common issues that lead couples to split up. But money-related matters don’t need to become major issues if you both go into your marriage with your eyes wide open. And if you keep those lines of communication clear.
Why talking about money matters
Having a better understanding of how your partner thinks and feels about money-related matters now will help draw you closer as a couple — rather than find yourselves playing against each other on opposing teams later.
Here are some questions for both you and your future spouse. Make sure you answer them thoughtfully and listen to your loved one’s answers carefully. Taking the time to do so now will be worth the effort.
First, know your partner’s financial situation
Everyone brings something different to a marriage in terms of finances. You probably know each others’ history pretty well in other areas of life, but how well do you know their financial situation?
What assets and accounts are you each bringing into the marriage?
You know if your future spouse owns a house or a car. But what about other things that could be converted into cash, like other real estate, artwork or furniture? Also, what does their savings look like?
What are your debts (including credit cards)?
Most people would like to enter marriage debt-free. And if you can do so, hooray for you! But the majority of Americans have some form of debt — whether it’s in the form of student loans, credit card debt, a car loan or a home mortgage.
And it’s not small potatoes: the average American owes $38,000 in personal debt (not including home mortgages).1
What are your credit scores?
Credit scores range from 300 (very poor) to 850 (exceptional). Your score helps lenders get a sense of how likely it is that you’ll repay what you borrow.
If you don’t know your score, many credit cards offer cardholders free access to some kind of credit, so you may be able to log in and access yours easily. There are also resources online to check your credit scores for free.2
Surprisingly, wealth doesn’t influence your credit score — but payment history, amounts owed, length of credit history, new credit and credit mix does.2
Are there any bankruptcies or other negative financial events in your past?
It’s not fun to talk about money problems you’ve experienced — especially with someone you love and want to impress. But you’ll be so happy for choosing the honest, straightforward approach.
Do you want to create a prenuptial agreement?
Some think that prenups are mainly for celebrities who marry, and one of them has a disproportionate amount of wealth. However, many millennials who are marrying later are opting for a prenup.3
Compare expectations and spending habits
Your partner’s financial history may be water under the bridge, but are you on the same page about how you want to handle things going forward?
Do you want to combine your finances, or keep separate accounts?
After tying the knot, many couples decide to merge their finances together by setting up joint checking and savings accounts — where you automatically deposit the bulk of your income — for shared expenses such as your rent or mortgage payments, utilities, groceries and other living expenses.
Some couples also decide to keep their finances entirely separate. The choice is yours, but as you build your new life together, you may get tired of making two separate payments toward your monthly expenses or keeping track of who paid what.
You can still have your own “fun” money by keeping your own individual accounts and making small contributions to them.4 Just make sure you have an open discussion about how much you contribute, and where that money eventually goes.
Are you spenders or savers?
You probably already have an idea if your significant other is a spender or a saver. So, after asking the question, maybe ask another one: “why?”
Perhaps your future spouse always orders out because their family didn’t like to cook. Or maybe they’re super thrifty because they have traumatic memories of their family not being able to pay their bills on time.5
Regardless of where each of you lands on that spectrum, it’s important to be aware of your tendencies — you’ll want to be thoughtful and mindful of each others’ feelings as you talk through financial decisions together.
How do you spend discretionary money?
After paying for the necessities, what nonessential items top each of your “most wanted” lists? Is it a vacation to the beach, a new set of golf clubs, a luxury handbag, or something else?
What things do you consider to be “essential” vs. “non-essential”?
Is a gym membership essential for your well-being? What about those high-end hair products and your daily vanilla soy latte?
Could you buy hair products sold at a big box store instead of a salon? Could you get by with making coffee at home sometimes?
Take stock of your current choices, and make sure you’ll be able to afford them once you tie the knot and take on more large-ticket expenses and bills as you build your life together.
What is an acceptable monthly amount to spend on non-essentials?
Is it $1,497? That’s the average amount Americans spend a month on nonessential items6 — which includes things like dining out, hobbies and recreational activities, vacations, music or video streaming services and gym memberships. (Yes, exercise is an essential activity, but you don’t have to go to the gym to do it.)
Make a list and talk it over with your new spouse so you can agree on how much nonessential spending your new combined budget should allow.
And even if money isn’t tight, it’s never a bad thing to reevaluate what’s important to you. What would you miss and not miss if you stopped buying it? Trimming some spending here and there can make a difference in the long run.
What would you like to do with extra cash (a work bonus or cash wedding gifts, for example)?
How do you want to use any money that’s gifted to you for your wedding? Put it in your savings account or toward your honeymoon fund?
How will you decide if you don’t agree, and will the decision create tension between the two of you?
Do you think we should pay off credit card balances each month or carry a balance?
Due to high credit card interest, let’s hope your partner’s answer is to pay it off each month, if you have the funds.
What relationships have you already established with financial professionals?
If you’ve developed a trusted relationship with a financial professional, see if your future spouse is OK with working with them together. If you don't already work with a financial professional, consider it after the wedding.
Define your roles
Marriage is a partnership. Who’s going to handle the various aspects of your financial life together? Or are you going to do it together?
How important is it to you to manage the finances?
Maybe you’ve been managing your own finances since you graduated college 10 years ago. Are you geared up to go another decade, or would you rather hand over the reins to your new spouse, who’s just as capable (or maybe more so)?
It may be an easy decision, or it may take some discussion.
Who will build and monitor the budget?
Being in charge of a household budget is a big commitment — but having one is important to know how much money is coming in, and where it’s going.
But having a budget doesn’t always mean complicated spreadsheets or require college-level accounting courses. Luckily, there are many different budgeting apps that can make this easier and more convenient. Talk to your friends or check out the app stores to see if any of them seem like a good fit.
Who will pay the bills?
It’s much easier to keep track of what you owe and when if the same person pays them every month.
If you share responsibility for paying bills, just make sure you’re communicating so things don’t get lost in the shuffle. Missing loan or credit card payments can be a substantial ding on your credit history.
Who does the taxes?
Tax season occurs at the same time year after year, but it seems it has the ability to sneak up on us. Getting married and some of the choices you’ll make together can add some complexity to this annual event.
Are you comfortable to doing your own taxes, or do you want to get help from a professional? Talk it over and have a plan so you aren’t scrambling right up to the filing deadline.
Agree on your future plans
Finances can be a big part of making long-term life decisions. Talk about your goals and what you need to get there.
How soon can we accumulate an emergency fund of three (or six) months’ salary?
For most of us, it’s easier to save for a tangible event (such as a vacation) than for an event that may or may not happen (such as a job loss). Plus, it’s more fun to look on the bright side of things.
However, the unexpected does happen — and the better prepared you are for it, the less stressed you will be if it does.
What major purchases should we make within the next two years?
Once you know what it is your saving for, it becomes easier to do. Perhaps you want to buy your first house together, a new car, or a big vacation. Or maybe you’re already planning to start a family.
After identifying what you want, figure out how much money you’ll need to make it happen. Then, divide that amount by 24 so that you know how much you need to save each month to make your goal.
What is your timeframe for starting a family?
This may depend on how old you are and what goals you want to accomplish before becoming parents. Adding someone new to your family is a big decision and a significant financial commitment, so think it through carefully.
And remember that becoming parents doesn’t always happen on your ideal timetable. It can happen earlier or later than you planned. Factors out of your control can sometimes delay parenthood, so give yourselves enough time.
When we have a family, will we both continue to work?
It may be too early to know right now, unless parenthood is right on the horizon. But as you start to make plans for growing the family, remember that child care is expensive: the average cost of full-time child-care in the U.S. is $16,000 a year.7
Having one child in daycare may fit the budget, but if you want two or three children fairly close in age, this may not be something you can afford.
One of you staying home for a few years may start to look appealing or more affordable — but beyond money, there are some other costs to leaving the workforce, so make sure you’ve thought about this decision carefully.
How much should we contribute annually to retirement savings, 401(k)s and/or IRAs?
Some say 15 percent of your pre-tax income is a good rule of thumb. It all depends on your current age, the age you hope to retire, your cost of living, and more. This is where a financial professional can be really helpful, so consider finding someone to help you plan for the future.
What are our retirement goals?
If you’re young, it might be hard to imagine not working for a living. But that day is sure to come, and you and your loved one will want to be ready for it. So talk about your hopes and dreams that are just around the corner, as well as far down the road.
Goals can change, so keep the discussion going
You want to be sure your goals align with your partner’s. And as you live your life together, what may have seemed to be important can change over time.
Be sure to frequently re-assess what you and your spouse want to accomplish, talk through how things are going and make adjustments as you need to.