Sharing a life means it’s time to talk about money
Certified financial planner Mari Adam, a client adviser and branch manager for Mercer Advisors in Boca Raton, Florida, discusses how couples can talk about finances. Q: How can couples talk about money issues without feeling intimidated?
A: We know that money is arguably the main topic couples fight about, so it’s really important to get it right. Couples need to make adequate time to talk and put all their cards on the table. You want to do this when you are comfortable with the idea of being honest, transparent and nonjudgmental. Each partner needs to come clean about all their debts — whether it’s credit card debt or student debt — their credit scores and more. If one partner has bad credit or debt that the other doesn’t know about, that will affect the couple’s overall lifestyle.
Q: After the talk, how do couples set themselves up for success? A: Think yours, mine and ours. Paychecks get deposited into personal accounts and from there put into the joint account to pay for joint goals. I also think proportional is fairest. For example, if one person makes $1 million and the other $50,000, it’s not fair to split expenses 50-50. If you each have your own credit cards, monthly statements need to be accessible to both partners to prevent them from hiding their spending.
Q: What if one spouse doesn’t work?
A: It’s really important to recognize the contributions of the stay-at-home partner. The working person should be contributing not only to their own retirement account, but to a spousal IRA for the stay-at-home partner as well. The working person should also put money into a joint or personal savings account for the nonworking partner. Q: What is the biggest shift in family dynamics that you’ve noticed with younger couples?
A: So many couples are living together, buying homes and even having kids without getting married. But what if you split up or something happens to one of you? The law doesn’t provide the same protections that it does for married couples.
If you buy a house together and you’re not married, consider going to an attorney to help you put in writing how much each of you invested, who’s responsible for paying the mortgage, how to split the money if the house is sold, and who has the right to live there if you split up or one partner dies or becomes disabled. When you’re making a big financial commitment, you want to think about the worst-case scenarios.