Vow to be financially savvy
Talking in depth about money is ‘imperative’ in a committed relationship
If you’re co-ordinating plans and details for a wedding, consider adding a financial adviser to the list of professionals you should speak with.
Brides, in particular, may feel discussing finances with their intended spouse is unromantic or awkward, says Dilys D’Cruz, vice-president and head of wealth management at Meridian Credit Union. But it’s crucial, she says, that couples planning to marry — or live together — talk in depth about money.
D’Cruz says an increasing number of women are becoming their households’ primary breadwinner. According to StrategyMarketing.ca, women currently control a third of all wealth in North America. Forty per cent of women outearn their husbands, with 33 per cent of wealth estimated to be controlled by women and 67 per cent of financial assets to be held in female hands by 2020.
“Women are more educated, have better paying jobs and are waiting longer to get married than they used to,” says D’Cruz. “They are going to be bringing things into the marriage and may own their own home. They may have been working a few years and their company has a pension. They could be bringing debt, as well as assets, into the marriage.
“It’s imperative that couples sit down and have that talk.”
“That” discussion should include what each person has in terms of assets and debt, their income, how they’ll manage their finances (whether they’ll pool their earnings in a joint account or have separate bank accounts), what their spending habits are and what their shortand long-term goals are.
“A couple can be uncomfortable asking each other those questions. But a financial adviser can act as an objective third party and get them thinking about these things — and put emotion aside,” says D’Cruz. “They also should know the implications if one of them owns a house, has a company pension plan or has an inheritance.”
Despite women having higher levels of education and earning power, there is still a financial literacy gap between women and men, she says.
“It’s not so much when people graduate, but it increases after marriage. A lot of women abdicate their financial responsibilities and say, ‘My husband deals with that.’ They lose that knowledge, and it applies to all ages. Women outlive men and if your spouse passes away, you need to know where you stand financially so you are not overwhelmed.”
While engaged couples don’t like to think they’ll ever divorce, that possibility should be part of the discussion since equalization laws require splitting all assets and debts. It may be prudent to consult a lawyer as well as a financial adviser, and couples may want to draw up a prenuptial agreement — especially if one owns a business.
“Everyone has varying views on pre-nups, but it’s not a dirty word anymore,” says D’Cruz. “The millennial generation is much more open about prenup agreements.”
She says many people take out life insurance or mortgage insurance to protect themselves against unforeseen events, and that getting the protection of financial advice should be just as important.
D’Cruz commonly hears “we know each other, we love each,” when talking to couples about finances, but says sometimes they don’t know each other as well as they think. For example, she says, one of her friends was experiencing financial difficulties and came to her for advice. The woman’s husband gave her a lump sum each month, but her friend had no idea of what his income was.
“Often, one spouse will come in and ask how they can manage debt better. But I ask people to come in as a couple, rather than just one person,” then they can work through a plan, and see what makes sense in managing their money in a more holistic way.
“We talk about how to move forward, how to save for the future, determine their goals, determine if they’ve thought about retirement,” D’Cruz says.
People marrying for the second time should also seek financial direction, she says.
“In a second marriage, it’s even more critical to get advice,” says D’Cruz. “There may be children involved, and more assets.
“Having a third party makes it objective rather than subjective. You want someone who will work with you and ask those personal questions. They’ll have you list your assets and liabilities and help you to understand your total net worth. It’s not just about protecting yourself. It’s about being educated and informed and seeing how you can achieve your goals.”