Getting ready to walk down the aisle again? Congratulations! But before you book a DJ or order flowers, talk with your future spouse about money.
While there’s no “right” way to blend finances, experts agree on one thing: communication is critical.
June Walbert, a USAA Certified Financial Planner practitioner, recommends that couples openly discuss how they will handle financial obligations such as child support and alimony from previous marriages. Then, they should work together to determine how they will move forward with shared investments, bank accounts, estate planning, and more.
“As a financial planner, I’ve found that money can be a major source of friction in a marriage,” says Walbert. “It’s important for couples to get on the same page about where they’ve been and where they’re going financially,” she explains.
Walbert offers these three strategies to address money matters before and after you say “I do” again.
1. Start Talking
“The most important step couples can take before marrying is to put everything on the table about where each of them stands financially,” Walbert says. “This means being forthcoming about debts, assets, obligations, spending habits, and anything else that can have an impact on your life together.”
This financial snapshot will help each partner understand exactly what he or she is getting into, whether credit-card debt or child-support payments. Full disclosure also can help avoid major money meltdowns after the wedding by providing a benchmark for budget planning and goal setting.
Talking through liabilities and assets, such as personal property, bank balances, employer-provided retirement plans, and IRAs also helps you identify each other’s financial style and will help determine if you’re spenders or savers.
2. Make a Plan
Once you both have a clear idea of where you are financially, it’s time to start making a plan for how you will work through money issues as a couple. “It’s important to create a budget that clearly outlines who is paying for what and how you will manage everyday financial issues,” Walbert notes.
While every couple is different, there are some questions that should be answered before you merge households.
- Will you have joint or separate bank accounts?
- Who is responsible for paying down pre-existing debt?
- How will you handle recurring bills like utilities, rent, and insurance?
- If there are children from previous relationships, how should benefits from life insurance policies, retirement plans, and other financial assets be distributed?
- What are your financial goals, e.g., buying a home, saving for the kids’ higher education, retirement, and so on?
- For active military members, how will things change if one spouse is deployed?
“When you’ve worked through all of that, put it in writing,” Walbert advises. “A good first step is to build a budget that you both can live with. This is the cornerstone for marital financial success. For blended families, it’s critical to discuss and clarify beneficiary designations early on and update the estate plan accordingly.”
3. Measure Progress
It’s one thing to talk about a financial plan and quite another to put it into practice. Things can change overnight with a job loss, a promotion, an illness or injury, an unexpected expense, or a financial windfall. “Be open to the idea of updating your plan as you go along,” Walbert says. “It’s a living document.”
She recommends that couples schedule monthly money dates to review their budget, measure progress toward goals, and discuss any issues that have come up. “It’s easier to adjust the budget on a month-by-month basis if tweaking is needed or to update your goals as things change. But if you wait too long, you could find yourself in a hole that’s too big to climb out of, and that’s when money problems become marriage problems,” she explains.
Originally published on USAA.com