Wedding season is upon us and with the national average cost of a wedding at nearly $34,000, according to The Knot's annual survey, newlyweds are getting a crash course in personal finance. Gone are the days when someone else pays for the nuptials, 91 percent of the respondents contributed some dough to the big event and 80 percent created a wedding budget, more than half who did so, spent more than the allotted amount.
If you are among the many affianced, let me be a buzz kill by reminding you that in addition to all of the fun stuff, marriage is a legal union that will also bring your finances together. That means that as you start discussing the wedding plans and costs, you might as well have a larger conversation about money. Your goal is to share information, like outstanding debt, the amount of money you have in savings or investment accounts, and your retirement holdings. If you are planning to purchase a home together any time soon, you should also pull your credit reports/scores.
Many couples ask me about whether to keep separate bank accounts and contribute to a joint account for expenses; or if they should merge everything into one account. There is no “right” answer on this one, nor is there one right answer about paying off old debts. These decisions are up to you, but you have to make them, one way or the other.
After you have that initial conversation, follow up with a plan to divide financial responsibilities. My recommendation is to work towards your strengths. If you are an app queen and like to track money, perhaps you should manage the day-to-day bill paying. If either of you wants to be responsible for overseeing the investment accounts, that’s fine, but make sure that you are on the same page when it comes to risk. If one of you is completely disinterested in all of this stuff, don’t let him/her off the hook: each of you has to understand the game plan and you should have quarterly chats (followed by a romantic dinner, perhaps?) to review the most recent statements.
Finally, a quick note about a pre-nuptial agreement (“prenup”), which is the most unromantic engagement topic ever. A prenup is a contract that outlines how a couple would split their financial lives in the event that the relationship does not work out. Nobody wants to contemplate the end of a relationship, but for those who have been married previously, have children from a prior relationship, or are owners of a closely held business, a prenup can be a helpful way to keep assets separate and to honor previous obligations.
If you are convinced that a prenup would be smart for you and your honey, it’s important to approach the topic without sounding like a jerk. Start by having the conversation at a time that feels “safe,” do not blurt it out in the middle of a fight or the night before the wedding!
Matrimonial attorneys advise that the earlier the conversation occurs, the better. Open up the dialogue by saying that you would like to discuss how both of you can feel protected in the event that the relationship does not last. If there is immediate resistance, do not push the conversation; rather back off and make a plan to revisit it.
If all of this sounds onerous, please know that the process is worth it: while not romantic, these conversations can save a lot of future heartache. Just like most issues, communication and empathy are the go-to tools that will help you navigate the process.