Before you get married, discuss these financial issues
Popping the question? Money is a major cause of marital discord. So be sure to quiz your beloved about finances before you tie the knot. Specifically:
* Can I see your credit report?
Credit reports, which can be ordered free through AnnualCreditReport.com, show how much debt you have outstanding (at least for reported loans) and whether you’ve paid on time. It wouldn’t be surprising if two young people starting out had little on file. But it would be a warning sign for young adults to have a lot of debt or late payments.
It’s not necessarily a deal breaker if your sweetheart has bad credit that stemmed from a job loss, illness or the like. But if the report turns up troubles that are news to you, you’d be wise to dig further before merging your financial lives.
* Do you have a budget?
Budgets aren’t mandatory, but spending less than you make is key to a healthy financial future. If your intended doesn’t have a budget, ask whether he saves for emergencies or ever runs out of money before the end of the month. If so, how is that handled? If she does have a budget, find out whether she sticks to it or just uses it as a guideline that can be undone by the first shoe sale.
* What’s your money baggage?
Everybody’s got some financial baggage, and it’s not always cute and matching. For some, money is a proxy for love or attention, so they need to spend a lot of it to feel good. Others might be frugal because their parents had experienced a financial shock, so they save every dime to feel secure. Maybe Grandpa got wiped out during the Great Depression and imbued a fear of risk. Or you might just be stingy or a shopaholic. Discussing the baggage can help you approach money tensions with greater knowledge and sensitivity.
* Who pays the bills?
This is a two-part question. Not only do you need to determine who will write the checks or handle the online bank account, you need to determine who is funding that account (or accounts) from which these checks are written.
Some couples merge all their accounts; some keep them separate and split the bills. Still others open “yours/mine/ours” accounts so they can pay bills together but keep some money separate. There’s no right answer, but those bills won’t pay themselves.
* What gives if we fall short?
If an unexpected expense, like a car repair -- or an expected expense, such as a vacation -- throws off your budget, how will you deal with it? Do you both give up your discretionary money until the bill is paid off? Or do you have some other formula for bridging the gap?
The main thing is partnership. You want to make sure you’re not marrying somebody who creates money problems but isn’t willing to help solve them.
* What about dependents?
Start with kids. Do you want them? Do you have them? If so, how are you going to support them? This can be a real thicket in blended families where there are both college costs and inheritance issues. Then there are the in-laws. Will you support them in their old age? Do they help support you now? If so, are there strings attached?
Better to ask now than regret it later.
