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Cents and Sensibility Guy Steele |
Deal with tough stuff --
money -- before getting
marriedSOON, it will be June, a popular month for weddings. If you are planning to exchange vows, you've obviously got a lot to think about beforehand.
But, in the midst of going over wedding plans, don't neglect a topic that will be important during your entire married life, your finances.
Open and honest communication is the key to a successful marriage, and communicating about money is essential. That's why you will want to get off on the right foot by learning now how you and your partner's finances and financial attitudes fit together.
Of course, you may be thinking that talking about money during the pre-wedding rush can add to the stress of what may already be a hectic time. But if you just block off a few hours on a day when you have no other plans, you should be able to make a lot of progress. In any case, you'll certainly need to revisit your financial situation and attitudes on a regular basis throughout your marriage.
For starters, though, here are a few questions to ask of each other:
» What are your financial assets? You'll want to find out the scope of each other's assets: savings, investments, retirement plans, etc. This information will serve as a foundation from which you can base your short- and long-term financial goals, such as buying a house and saving for retirement.
» What are your debts? Here's the flip side of the asset question. You might find it hard to ask about each other's financial obligations, but it's vitally important that you share this information, because -- whether you realize it or not -- you may end up sharing some of these debts. Find out about student loans, car loans, mortgages, credit card bills, everything. While going over these debts, you may even get some ideas about how you can consolidate them.
» What expenses shall we share? Sooner or later, most married couples face the "two checkbook or one" question, but there's no one "right" answer. How you handle the payment of your living expenses is really a personal matter. Many couples have found a workable solution by paying major expenses -- mortgage, car payment, utilities, etc. -- out of a joint checking account, while still maintaining separate accounts to handle incidentals, gifts and other costs incurred by just one partner.
» What type of investor are you? At first glance, you might think that having a different investment personality than your partner would not be such a big deal. And yet, a substantial number of couples do experience tension when one partner wants to invest much more aggressively than the other. While there's nothing stopping you and your spouse from maintaining separate investment accounts, you may find that, in many cases, you may actually do better by pooling your resources into joint investments. And so, you each may have to compromise to accommodate each other's preferences The aggressive partner must be willing to play it a bit safer to reduce volatility, and the conservative partner needs to accept a bit more risk in exchange for potential higher returns. As you shape your investment portfolio, you may want to work with a financial professional, someone who knows your collective needs and goals, and who can recommend a course of action that's suitable for your common interests.
Going over your finances this way may not be as much fun as planning a honeymoon, but it can definitely help you build a harmonious life together.
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Guy Steele is a financial planner and head of the Pali Palms office of Edward Jones. Send planning and investing questions to him at 970 N. Kalaheo Ave., Suite C-210, Kailua, Hawaii, 96734, or call 254-0688