Planning Your Future
With this debt, I thee wed: Time to discuss money, honey
When Dave B. graduated from law school, he and his wife-to-be had more than their love in common. "We both had a tremendous amount of student loan debt," he says. The upside? “It means we've always talked about money."
That's a big advantage, says Susan Zimmerman, a financial consultant and licensed marriage and family therapist with Mindful Asset Planning in Apple Valley, Minn., who notes that not getting on the same page financially is a very frequent source of strife for couples. Indeed, conflicts over finances rank first among sources of marital discord that could lead to divorce, according to a 2012 Kansas State University study published in the journal Family Relations.
So what do you do if you're in love and planning to marry—and one or both of you has significant debt? “When people plan to get married, they communicate about what flowers they want for the wedding and what color the bridesmaids' dresses are going to be," says Josh Palmer, CFP®, head of the wealth advisory team for Chase Wealth Management. What they too often neglect, Palmer says, is a frank talk about their financial future together.
Zimmerman explains that when you marry, the two of you become one unit for most legal and financial purposes, and that makes it crucial for you to reach an understanding about finances. "Communication about money is the very first thing to get right," she says. "Problems don't come from talking about it in the wrong way—they come from not talking about it at all."
According to the 2017 Slate Credit Outlook Survey, 73% of married Americans know their spouse's exact credit score, and 34% said that it was important to talk about credit health when a relationship starts getting serious.
When to start the conversation
Palmer admits that money is probably not something to bring up on a first date. But the sooner you broach financial issues, the better. “You need to get this subject out in the open, so you can make plans to alleviate whatever problems may come up," he says.
Adds Zimmerman, “The first thing is to say, 'I think it's important to talk about each other's financial situation.' Then instead of just launching into it, say 'Let's have a date that we both choose ahead of time so we can prepare our own numbers.'" Having a set date can give both people time to assess their finances. She also recommends giving your partner a warning, if you feel that it is warranted. Saying “I have some debt that I want to talk to you about" can help set the stage.
What to put on the agenda
Dave found that being open about absolutely everything—including credit card debt that you've probably been meaning to clean up—can help the two of you avoid unpleasant surprises down the road. Zimmerman, who encourages writing down a list of what you'll share, says that an absolute requirement is using respectful language. She also suggests:
• Compiling a list of “OO" (owned and owed).
• Gathering straightforward information about each debt: how much, to whom it's owed, the payment plan and a time horizon for retiring it.
• Your credit scores (If you're looking for tools to build your credit health, visit Chase Slate)
• Focusing on the positive. Palmer says that setting financial goals for your future together can help you bond more strongly.
What not to say
Taking your significant other to task for past mistakes isn't likely to be productive. “There needs to be an understanding that there will be no condemnation of what the other person brings to the table," Palmer says.
Adds Palmer, “As a couple you need to know that talking frankly about your finances will not make or break your engagement—whereas not talking could make or break your marriage later on."
Getting off to a good start
Getting accustomed to your new spouse's money style may take some time. One good way to help that process along is to set an objective that you can work toward together, suggests Palmer. Whether you resolve to reduce a credit card balance by a certain amount or to set aside money for your first vacation as a married couple, “accomplishing your goal together can be very powerful," Palmer says.
He also notes that each of you needs to accept that your way of dealing with money isn't the only way. And don't worry if you find yourself at odds over some details. “It's natural to disagree," says Zimmerman. What matters is how you deal with it—with as much respect as possible. Humor helps, too. Try to laugh about it together, she suggests, and get creative about seeing the lighter side of having to deal with financial matters.
The more you know about each other financially, the better prepared you'll be to move ahead together. When it comes to marriage, Palmer says, “vow to work together as a single entity in reaching your goals." For Dave B. and his wife, that has meant keeping the lines of communication open. “It's a constant conversation," he says. “But we've paid off a big amount of what we owe, and our credit card balances are down to zero. That gives us, as a couple, a real sense of accomplishment."
Marcia Lerner lives in Brooklyn and writes frequently about personal finance.