Are You and Your Future Spouse on the Same Page About Finances?

The most stereotypical, pre-marriage conversation that can make or break a relationship is generally about children. A conversation many couples unfortunately neglect is one regarding financial goals, which is too bad considering money can be one of the most contentious aspects of marriage.

A study performed by Utah State University found couples who argued about finances at least once a week were more than 30 percent more likely to divorce.¹ Their survey examined a variety of indicators to determine which aspects of marital discord were the most reliable forecaster for divorce. Of all the potential disputes analyzed–ranging from sex and quality time spent together to in-laws and household chores–disagreements about finances turned out to be the most accurate signal that divorce was a likely outcome.

The Million Dollar Question

You can learn a lot about a person by asking what they would do with a million dollars. It’s a question you may have been asked before during a job interview, but maybe not by a serious boyfriend or girlfriend.

So, what would you and your potential spouse do with a million dollars? Go on a year-long, globe-trotting vacation? Buy Gucci handbags and sports cars? Invest in a franchise, property, bitcoin or equities?

If you and your fiancé have diametrically opposed answers to these questions, chances are your relationship would benefit from a frank, honest discussion about your life goals and future.

Questions to Ask

Do you know your significant other’s salary? How much debt do they have? Do they have a 401(k) or other retirement savings? Where does their paycheck go? Do they even have a savings account? It’s easy to neglect these fundamental questions when you’re in the throes of romance, but when the love dust settles back down to Earth and a stable, less exciting phase of the relationship commences, these types of questions will be fundamental factors that dictate the relationship’s longevity.

The website www.moneyunder30.com can be a useful resource in helping you and your potential future spouse answer these questions and map out your financial future. They have a helpful worksheet couples can sit down with and fill out together. Chances are, even if you and your loved one are fairly open and transparent with one another, you’ll still discover something you didn’t know, for good or ill.

Some of the things the worksheet aims to uncover are:

• Current credit score
• Different types of debt, including consumer debt (credit cards, car loans), student loan debt and mortgage debt
• Assets, including cash and investments
• Financial values, i.e. the way you approach your finances and spending habits
• Financial and life goals

Going through this worksheet and honestly answering all the questions is likely one of the smartest things a young couple can do, before they start spending money on engagement rings and venue down payments.

For example, you can learn a lot about a person and their spending habits based solely on the types of debt they have. Mortgage debt, although technically a liability, is likely a sign of responsibility. A person with a mortgage had to prove to a lender that they had a history of responsible behavior and stability, otherwise they would never have been approved for a loan.

Car loans are similar, although a person financing a new luxury car beyond their means may not possess the same priorities as a person who drives a fuel-efficient used vehicle.

Student loans could also be a positive or a negative. If someone took out loans to pursue a valuable degree in a highly-competitive field that could be a sign of responsibility. Conversely, someone who had to go into six figures of debt to pursue a graduate degree in Medieval Art History may not be the most financially responsible person in the world.

Credit card debt is another one of those tricky things some people purposefully hide during a relationship, especially before things get serious. There’s undoubtedly a societal stigma associated with excessive credit card debt, and no one wants to be judged irresponsible due to past mistakes. But, you also don’t want to get blindsided a month into your marriage when you see a letter from a collection agency demanding thousands of dollars for your new spouse’s old credit card debt, which could suddenly be just as much your problem as theirs.

Get Help from American Financial Solutions

Just because you or your future spouse have money troubles doesn’t necessarily mean you should call it quits. If one or both of you are struggling with debt, the experienced and dedicated financial professionals at American Financial Solutions want to help. More than 250,000 people have paid off over $42 billion in debt with the assistance of our certified financial counselors, and they’d be happy to help you and your loved one. Call us at (888) 282-5844 or fill out our online form to get started.

¹http://www.divorcesource.com/ds/main/u-s-divorce-rates-and-statistics-1037.shtml

Published Oct 24, 2017.