What to "Say" beofre you say "I Do"
Congratulations. You’ve met that special someone. Now it’s time to talk money.
Okay, so it’s not the most romantic of conversations. However, whether you’re taking the plunge and getting married, becoming common-law partners, or simply moving in together—this is a big commitment. Because sharing a roof also means sharing expenses and (hopefully) building towards common goals. Which is why it’s important to remember that a relationship isn’t only personal, it’s also ‘financial’.
Getting beyond “How do you like your eggs?”
According to Educators’ Certified Financial Planner professional Lisa Raponi, “Discussing money with your potential partner is as important as talking about where to live or whether to have kids. Maybe more so.”
In a recent survey, 68% of Canadians said fighting over money would be their top reason for divorce. However unromantic it may sound, at the very least, partners-to-be should discuss the following:
Current debt (from student loans to how many credit cards they have)
Financial goals. If one of you is saving for a home and the other for a trip around the world, it warrants a conversation.
How your funds will be pooled. One large account? Two separate ones? Individual accounts plus one pooled account for common expenses?
Before your conversation, understand your own point of view.
How you feel about money and how you deal with it will be the result of many things, including how your family dealt with money when you were a child. Did they take money for granted, or did they budget? Did your parents discuss financial matters with the kids? Did you help with finances with a part-time job?
How to initiate the conversation.
Some couples shy away from ‘the money conversation’, finding it awkward. So it helps to put it in context: the reason you’re talking is because the relationship is important to you and you’re thinking about the future. Make a plan to discuss money and pick a time and place where you’re both relaxed and comfortable. Start the conversation with general questions (“Did you have an allowance when you were a kid?”, “What was the first thing you ever bought on your own?”) before moving on to more specific questions, like the ones we’ve listed below.
Below is a list of questions you should discuss with your partner—some of which you, yourself, may not have thought about in detail before. Review them before the conversation to get a sense of what’s most important to you. Also, think about where you are prepared to be flexible, and where you might not be.
What is your annual income?
What benefits does your employer offer?
How long do you plan to work in your current position? What are your plans for a change?
At what age would you like to retire?
Do you expect your spouse to work full-time, part-time or at all? For how long?
Cash flow, savings and bills
How much of your income do you currently devote to your household’s monthly bills, savings, and investments? How much do you expect to devote in the future?
How much do you believe should be kept in an emergency fund?
Which of you will have the responsibility for paying which bills?
Are you willing to have joint checking, savings and investment accounts?
Do each of you want to have an individual account for spending purposes? If yes, how much would be funded into those accounts each pay period?
How much debt do you have? Is it educational or credit card debt?
How much debt is acceptable or unacceptable to you? Why?
What is your credit score?
If your partner has credit card debt coming into the marriage, are you willing to pay it off with your income or savings?
Do you think your partner should be willing to do the same for you and to what extent?
Are you planning to maintain or obtain individual credit cards in your name?
How do you feel if your partner is planning to do the same?
Do you wish to have joint credit cards for you and your spouse? If so, how will each of you contribute to the payments?
Do you want to have children? If so, how many and how soon?
Will you or your partner leave the workforce to be a full-time parent? Which of you will leave the workforce and for how long?
What are your ideas about educating your children?
Do you intend to fund their education?
Also, consider this: if your partner is not a member of the education community, you may have opportunities that he or she does not—such as taking a 4 over 5 or an earlier retirement. These should also be discussed.
Moving forward. What’s next?
So you’ve had the conversation and are moving forward with a partner who feels much the same about money and shares your goals. Working together, you’ll need to develop a plan to achieve it all. What’s more, as your life changes—having children, buying a home—you will have new questions about how to manage your finances. That’s when it will pay to have a financial expert you can trust to answer your questions and help you make important decisions.
The information provided is general in nature and is provided with the understanding that it may not be relied upon as, nor considered to be, the rendering of tax, legal, accounting or professional advice. Please ensure to consult your accountant and/or legal advisor for specific advice related to your circumstances. Educators Financial Group will not be held responsible or liable for any losses, costs, damages or expenses incurred by reason of reliance as a result of the aforementioned information. The information presented was obtained from sources that are believed to be reliable.