While every married couple is bound to have some financial conflict now and then, starting a marriage off with these money questions could help you get off on the right foot.
Several studies have actually found that money is a top cause of stress in relationships, but learning how to talk about money before you get married can be key to help align your financial hopes and dreams.
These are four money questions you should ask before marriage:
1. Are we aware of our debt, assets and expenses?
It is important to sit down as a couple and take inventory of all the debt and assets you’re each bringing into your long-term commitment. This includes everything from student loans and mortgages to savings and retirement accounts. You may also want to analyze your salaries and monthly expenses to see your full financial picture.
2. Will we have joint or separate bank accounts?
Another way to talk about money before marriage is to consider whether you want to combine bank accounts, keep them separate or do a combination of both. The decision depends on each person’s preferences and the needs of the couple.
3. How could our financial dynamic change over time?
Subjects such as saving for college, aging parents or who will work after having a baby should be discussed. While the answers to these types of questions are personal and will vary from couple to couple, the most important rule is ensuring couples address them early on so there’s a clear understanding of how to handle each situation when it arises.
4. How has our upbringing shaped our goals?
In many cases, an adult’s upbringing shapes his or her financial goals so it is important to know how your parents handled money and how this has influenced your financial expectations and goals.
Is marriage also a partnership?
When you get married, your life changes in different aspects. Your personal independence stays behind and now you're going to share a home and a family with your significant other. In order to avoid future misunderstandings and uncomfortable situations, it's necessary that both of you have a transparent and honest talk about money.
Firstly, take into consideration that you come from different families, and you may not think alike when it comes to money management. You should respect the other position and be honest about the expectations of your common life. You may have dissimilar income levels, and that's a good reason to discuss how you’re going to organize your financial life together.
You should establish a budget together, and write down all expenses and bills that you'll have to face as a married couple: rent or mortgage, car insurance, gas, groceries, etc. Write down also how much you’re expecting to spend on eating out, movies, holidays, and other discretionary expenses. Now that you know how much money you should set apart, you need to think about what to do with what's left.
You can set some common financial goals, like creating an emergency fund, or starting a college fund for your future children. In addition to this, you can discuss together how to invest the savings in order to make more profits.
Finally, don't lose all your independence and your personal finances. As you earn your money, you shouldn't need to seek your couple's approval every time you'd like to buy something. Besides the bank account that you may open together, you should keep your former ones and allow each other some privacy about your personal expenses.
Your relationship is based on love, but also on trust. This is one of the most important strengths, which will help you avoid suspicions and doubts about money management after marriage. You should always have an open dialog. If anything in your financial life changes -from an unexpected debt to a welcomed extra bonus- you should tell your partner. As said, communication is key!
Divorce: how to deal with a financial break-up
Breaking up a marriage isn't cheap and divorce can be tough on your credit score, too, but fortunately, it is possible to protect and rebuild your credit score. Here is how you can do it.
Your ex and your credit
When you divorce, you'll possibly hire an attorney to divide the assets and debts that you and your spouse shared and once your divorce is finalized, the court will provide you with a divorce decree. This document is filled with information, including a list of who will pay what debts, but the problem is a divorce decree won't protect you if your ex doesn’t make payments on accounts that you jointly owned.
Creditors don't look at what your divorce decree says, they will only look at what your credit agreement says. This means missed payments on mortgage loans, auto loans, and other joint accounts can also wreck your credit score.
Close joint accounts
One of the best ways to avoid any damage to your credit score following a divorce is to close any joint accounts you shared with your spouse. They should now be in your name, or your spouse's name, only. That way, if your former spouse misses a payment, it won't hurt your credit score.
You should close any joint credit card account, any auto loan you share (you might be able to refinance into a new loan that is solely under the name of one of you). The same is true for a mortgage.
Refinancing isn't always possible, so if that is the case, you might have to sell the car or home in both your names.
Rebuilding after the damage
There are no quick fixes for a credit score that has taken a dive. Doing so requires the same basic financial habits that helped you build a solid score in the first place.