Special to the Recorder
Nearly 40 percent of engagements occur during the holidays between November and February. While Valentine’s Day tends to spark discussion of love and marriage, it can also lead to a less-desirable conversation about finances as a couple. According to the National Foundation for Credit Counseling, 68 percent of engaged couples have negative attitudes toward discussing money with their fiancés. It has also been reported that monetary issues are the reason for a staggering 90 percent of divorces.
Instead of avoiding the money talk, it is important to foster a healthy relationship and sit down with your partner to discuss future financial planning before making a lifelong commitment. Here are a few tips to start that often-tricky conversation with your significant other and stay smart when following your heart.
Complete a financial wellness assessment
Before you say your vows, it is vital that your partner is fully aware of your financial situation. This can be achieved by completing a financial wellness assessment that shows detailed information about each other’s current financial status. It is recommended that you consult with your own financial advisor before making any major decisions together.
There is nothing romantic about legal forms, but for those entering a second marriage, the only way to protect the assets you bring to the relationship is to create a prenuptial agreement, which will clearly delineate what is solely yours before marriage.
Consider yourself equals
Many couples begin joint finances with opposing financial backgrounds, and this difference may cause a divide between partners. The size of your paycheck does not determine your role in the family finances. Respect each other as equal partners, with an equal say in money management. When making big decisions regarding the joint account, make sure you are present as a couple to discuss and sign any major documents. Another option is opening a joint bank account for bills and shared expenses while keeping a personal bank account for individual spending.
Begin to build a budget
It can be difficult to move from a mindset of caring for your own financial needs to balancing the needs of your spouse with your own. The best way to start is to merely keep track of all expenditures for a month or two and determine your household needs. After solidifying your joint needs, you can begin to talk about individual needs and wants. These can include items such as gym memberships, clothing costs and other items you may spend different amounts on. Having a weekly budget meeting can help you evaluate where you are in working toward your financial goals.
Define short-term and long-term goals
It is important to set goals that you can work toward as a couple. These long-term goals should be part of your financial plan. The plan can help you determine how soon you can buy a house or when to start a family. It can also help you plan for your child’s college education and your retirement. When you have specific goals you are working toward each month, it can make budgeting an easier task. Some good beginning goals may be to pay off credit card debt, start a safety net savings plan or begin saving for a down payment for your home. Those goals will drive your decisions on how to spend and save your money together.
Cheryl Barnett is senior vice president and private client advisor at First Tennessee Bank, specializing in the unique and complicated financial affairs of business owners, executives and professionals. First Tennessee Bank opened its Jacksonville office in 2014, focusing on services in commercial, commercial real estate, private client banking and wealth management.