I’ve been happily married for 14 years as of August 2021. Before I got married, I had what most people would consider a rather unromantic conversation; it was a conversation about money, our goals and values towards it. It was probably one of the most important conversations my husband and I ever had. I’ve captured the key points we discussed in this “getting married checklist.”
It’s a necessary conversation that you and your soon to be betrothed should have so you both are on the same page when it comes to money. Why? Because arguments over money are the leading cause of divorce.
Below is a list of the things you should do and talk about to help you along to happily ever after:
1. Pull each other’s Credit Report
This is a big step – and rather intrusive. If you’re not ready to pull each other’s credit reports and go through them, you may not be ready to get married. A credit report will show credit accounts like car loans, student loans, credit cards etc. It’ll also show how much is owed. It’ll show if you’re in “good standing” or if you’ve missed payments. Go through everything together.
Be honest about past debts. Doing this really exposes you, so be kind to one another. If one or both of you have large debts, look at this as an opportunity to work together to resolve those debts. If both of you are debt free and have excellent credit scores, congratulations! Now is the time to set a plan to keep it that way. If one or both of you have debts or a lackluster credit score, now is the time to help build each other up.
Speaking of debt…
2. How do you each of you feel about debt?
Does carrying a credit balance on a credit card make one of you feel ill and for the other, it’s normal? How do each of you feel about taking on mortgages and car loans? Would you rather save up for big expenses or finance them? Figure out each other’s attitudes towards debt, accumulating and paying it off. Being on the same page about debt is critical. One of the biggest things Mr. Moneyaire and I have taken on are mortgages for investment properties. Our debt is over 6 figures. Debt makes us both nervous; however, this debt is more like a business expense for us because ultimately we earn a profit after our debts are paid every month from our real estate holdings.
3. Talk about financial goals
Ask each other what financial goals you have. If you don’t have financial goals, now is the time to develop them, together. During our “unromantic” money date, we both talked about our goals. We both decided that travel and financial security (which eventually led us to pursue financial independence) were our two main goals. Exploring the world and making sure we had enough in reserves to pull us through hard times became our paramount objectives. This was also the perfect time to discuss our careers and what it might take to get the the “next level” or what that even was.
As we talked about all our dreams we strategized on how we might achieve them. To allow me to get my MBA and stave off huge student loan debt, we talked about having a smaller less expensive wedding. We talked about what trade-offs we were willing to make to really go after the things we loved. A smaller home would be fine with us if it meant giving us the freedom to travel and invest. One of the tougher pills to swallow was going down to one car. For Mr. Moneyaire a car represented freedom. We both worked together to go down to one car and invest our savings so we could work on being truly free to pursue; travel and investing.
This is a topic you both should revisit at least every year as goals can change and to see if you’re on track. Once you know what it is you both are working towards then you can work backwards and develop a plan (budget) on how to accomplish these goals.
Speaking of budgets…
4. How as a couple should you spend money? How much do you both earn? From what sources?
Having goals are great, but unless you develop a plan on how to achieve them, they’re just nice thoughts. Is your latte habit at Intelligentsia compatible with the goals you’ve both set? It could be. But you’ll never know until you break down all your expenses and put them against your income to see how it plays out. In this part of the conversation its critical to layout all of your sources of income. You can’t make a real budget if you don’t know how much you both will be working with. This is an important point; when you get married your incomes are for the both of you. It no longer matters who makes more or who pays more or less. You’re both responsible for everything together as a unit.
When we laid out all our incomes we had to make the hard decision to not have a big fancy reception common in Mrs. Moneyaire’s culture. At the time we couldn’t afford to do that and stay out of credit card debt, save for retirement, build an emergency fund, allow Mrs. Moneyaire to go back to school and travel. Because a big fancy wedding wasn’t a goal of ours, we made the decision, together, to have a destination reception which would be far less costly. It was a tough choice, (and an unpopular choice amongst our families) but one we both made together.
After we married we took another look at our budget and also cut out things like buying coffee from Starbucks on the weekends and buying drinks and appetizers when we went out to eat to help us stay within our budget. After we were married we even went into a self proclaimed era of austerity to save as much as we could in areas that didn’t matter to us so we could travel. Our budget helped us figure out how we could put our money towards the things we wanted and valued over things we didn’t.
5. Where do you want to live?
This was a very important question and will have a huge impact; more so than your latte habit. Housing is one of the biggest expenses you’ll have as a couple. Do you want to rent or own? Either option comes with its pros and cons, such as living maintenance free or building equity. Do you both want to live in a home with a smaller square foot, or would you like to get a home you can eventually “grow” into? Urban, suburban or rural? If city living is important to you by all means go for it. If living in the country with an acreage is your dream, go for it. You may not get what you want exactly your first or second time around. Work together, budget accordingly and save towards your goal, together.
It was the height of the housing bubble when we bought our first home. Eager to buy a home, but leery of the sky high prices, we both decided to keep in line with our financial goal of being financially “comfortable.” This meant we would only purchase a home that the person with the smaller paycheck could afford, regardless of the loan we’d qualify for together. We also agreed that we would buy in the suburbs of our city instead of in the city proper. Property was cheaper in the burbs as well as groceries and nearly everything else.
When the bubble burst and a few years later we wanted to move, we realized we were very underwater on our property. We got creative and rented out our first place when we found a larger home we wanted to start a family in. After we rented out our first home we could afford moving on to our next home. Again, we looked for a home that we could afford on the smaller paycheck. We’ve stuck to the idea of having a smaller home than we can afford throughout our marriage and it has helped us save hundreds of thousands of dollars that we then invested.
6. Talk about your Assets, Insurance and Beneficiaries
Along the lines of speaking about the debts each of you carries layout what each of you has in assets. Show each other what is in your business, 401k, Roth, brokerage accounts, etc. Once you get married make sure to sign each other up as each other’s beneficiaries and consider getting life insurance.
If one of you were to pass, and you want the surviving spouse to inherit an IRA or 401k, make sure they are the designated beneficiary. If they are not named, they won’t automatically be entitled to those accounts. Same for a life insurance policy.
You’ll also want to consider life insurance policies, especially if you have or will have kids. The younger you are the more you’ll benefit from lower premiums. Insurance should work to replace the income of the deceased partner. This is important because the devastating loss of a spouse shouldn’t lead to financial hardship for the surviving spouse and children. A good rule of thumb is to get a minimum of 12x your salary in insurance and for as long as you think you’ll have kids dependent on your salary. The idea being that, if invested, that 12x could generate enough passive income to cover the expenses the deceased spouse’s salary used to.
Avoid fancy insurance products like whole or variable life policies, or any policy that claims you might have a cash value after a set number of years or that has a surrender charge. Don’t use insurance as an investment vehicle. You’ll pay steep premiums if you do use insurance this way. If you’re considering opening a whole or variable life insurance policy on a child to save for college, consider a 529 first. The White Coat Investor does an excellent job of explaining why children do not need life insurance.
7. Separate finances or a combined “pot”?
You both have been living as individuals with your separate accounts… now is the time to combine them, or not. Each couple is different but it’s my strong belief that by combining finances and working together as a couple, couples can get much further ahead of the financial game than if they keep things separate.
Mr. Moneyaire and I combined our finances just before we got married to help pay for wedding costs. It was one of the best decisions we made. By doing this we were stating it did not matter who made more we were both equal in the relationship and that our money was now a shared asset. We would earn, save, invest and spend together. Mr. Moneyaire’s salary was just as much mine as mine was his.
Communication, Transparency & Equality
Early on in our marriage we discussed all purchases before we made them to make sure we both were on the same page. We treated each other as financial equals; one person didn’t get a final say because they made more. We made big and small purchases together and with both of us on board. What made this work well was having a budget we made together we both agreed on.
Because we had 100% combined our finances, we always knew how much we had. We developed a pattern of discussing our budget every month. We both knew how much we had and where our money went. It made building an emergency fund easier as well as investing. As we invested and saw our account values go up, it only motivated us to do more.
Now, there are plenty of couples that keep separate finances, and they do just fine. Just keep in mind transparency in your relationship is critical on all levels, especially financial ones. Financial infidelity, or wracking up debt or expenses without the other partner knowing, can wreak havoc on your finances and relationship. We wanted to avoid this at all costs and transparency and shared accountability helped us with that.
If you’re anxious about combining your financial life with someone else because one or both of you owns a business, has children or brings significantly more financially to the relationship, consider getting a prenup. The prenup will help the both of you itemize your assets that you would not want to split should the union cease to exist. Plus, you can even write out the terms of a divorce outlining alimony or how marital assets (or debts) would be split up. Use the prenup as a way to establish a base from which you both will start from as a married couple.
You’re a Team!!
When people get married, its a decision to become a team, to share everything. You want to steer clear of making one partner feel less than for something as silly as money. Save that for when you fight over who empties the dishwasher more often 😉
Good luck in married life! The Moneyaires wish you lots of joy and adventures. Looking back on this date, we ended up having one of our best conversations – what could be more romantic?!
Although conversations about money may seem unromantic, we hope that you find it actually really brings you together. Use this checklist as a way to set the foundation of the married lifestyle you both want together. Marriage is easier if you work as a team, are transparent and talk things through.