10 Tips to Set Your Money Future Before You Get Married

MSNBC list 10 money-related tips for couples who are planning to get married. In particular, these two seem to be especially worthwhile to me:

Be completely up front with each other about how much money you earn, spend and owe. Be honest about any and all debts, child-support obligations, alimony payments, business loans and other key financial details.

In addition to adopting a policy of full disclosure when it comes to debts and other potentially challenging financial obligations, also keep your partner informed about events that affect your balance sheet in a positive way, such as bonuses, inheritances and other expected or unexpected windfalls.

In other words, spill the beans -- completely. Each of you should share the full-force of your financial past and present. Otherwise, your financial future (as well as any other future) could be pretty rocky.

I've confessed before that we really didn't talk much about money prior to getting married. That said, we were both older, more established and earning good salaries. We were also compatible in thinking when it can to money (though we really didn't know this), so it all worked out. In hindsight, we should have hashed it all out up front just to be sure.

The piece also suggests you should think about using joint or separate accounts. Their thoughts: 

Joint or separate accounts? While this is a highly personal decision, many financial advisers recommend that couples have joint accounts for pooled savings, investments and household expenses. Then each person may want to establish separate checking accounts for discretionary spending.

I know this is not a very popular position today, but I'm a "joint account" proponent. What's mine is hers and what's hers is mine -- so why do we need separate accounts? There's none of this "my money" or "your money" -- it's all "our money." Hence our finances are all in joint accounts.

Those of you who advocate separate accounts can now feel free to berate me in the comments section. ;-)

Update: I forgot to mention that while we have all of our money held in joint accounts, we do have amounts set aside that we each can spend on whatever we want. We call them personal accounts. They aren't "accounts" per se (as in a formal checking account), simply budgeted items we can spend on whatever we want. So when I go to the bike store and get a new jersey, I simply say "I'm taking this out of my personal account" and all is well -- my wife knows I'm spending part of the money we have set aside for me to spend however I want to.

This is how we manage to have all of our money held jointly and yet still have dollars set aside that we each can spend as freely as we want. I was seeing in the comments that many people felt (or at least implied) that people couldn't do both, but since we do accomplish both tasks, I thought I'd give a bit more explanation.

Comments

[Laura]

We have both joint and individual accounts. Most of our money goes into joint. We use our individual accounts for gasoline, food (eating out at lunch), gifts, and for items we personally enjoy. He gets video games he likes and I get me Star Trek books. It has been working so far, with a little bit of tweaking, mainly on increasing on deposits for joint savings.

[ahmer]

this is a nice article.this will help in the future. thanks:-)

[Anitra]

The pastor at our church requires any couple in pre-marital counseling to work up a budget estimating income and expenses to be enacted after the wedding. I think it's a great way to get couples talking to each other about their money habits, income, debt, etc. When you're just dating, it's not something that usually comes up in conversation.

[Jeremy]

I was a strong proponent of joint accounts before we got married, but after many discussions we tried out a combination of joint and individual. Like Laura, the bulk of our salaries are direct deposited into the joint account, but a set amount goes into each individual account each month as well. The individual accounts are great because you don't have to justify anything you buy with that money. I think it has really helped us control our spending and it separates much of the nonessential purchase stuff out of the budgeting decision that goes on for the joint account. The only spending that is hard to decide on whether it is joint or individual is dining out together. We do it from individual so that we still feel like we are going on "dates". While I was reluctant at first to go with the joint + individual set up, I can't imagine doing it any other way now.

[Kristen]

I completely agree on the joint accounts. My husband and I have been married for almost 3 years. We got married right after college and he is still in Law School. I am the only one working until he gets out of school and there would be a lot of resentment if we had separate accounts. I feel the same way about what's mine is his and vice versa. One thing we have found to work really well is sort of like Laura's. We each have a "budget" each month that is our spending money. This includes clothes, entertainment, money for going out to lunch, etc. After we implimented this our spending has been much more in line with where we want to be. We did set up separate savings accounts along with our joint checking and savings so that we each have money of our own. I agree with you that a marriage is joint and therefore money should be joint as well. I would never want to feel that if I decided to stay home with future kids that I wouldn't have any money to spend so I treat my husband the same way now while he is still in school and not working.

[Will]

I agree that the joint setup falls right in line with the joint nature of marriage. I don't think that that it means you shouldn't have separate accounts. Not everybody is totally in sync with their partner money-wise, and what one might think is necessary might look frivolous to the other.

I'm a gamer, and have been for about 20 years. My partner might see buying a $400 console and $60 games as totally frivolous. I wouldn't have it any other way. Individual accounts can help avoid any friction that could result from having to account for what happened to OUR money.

Of course, it goes without saying that whatever goes into separate accounts is LEFT OVER from all joint obligations.

[rwh]

We've been married for over 20 years and have always had joint accounts, with the exception of our retirement portfolio, where each of us has separate accounts.

We have also made a point to make sure we divide certain obligations in each other's names. The water bill is in my name, the gas and electric bill is in my wife's name etc. That way, each of us has a payment record in our own name.

But our checking account is joint, as are the house, the cars, the credit card and all our savings and investments outside of retirement.

We've never had any significant disagreements over money. I think the reason is we have a backwards budget. We pay ourselves first by saving and investing predetermined amounts each month and whatever is left over we spend. And we're both pretty frugal about spending on ourselves. It isn't a big deal when you know there is plenty of money in savings.

The only times we actually come close to getting mad at each other is when one of us buys something for the other as a surprise and the recipient thinks it cost too much.

[Heidi]

This is always unpopular advice for people who have had joint accounts only, but I'm in the "joint & separate" camp. I highly advocate having your payroll go into an individual account and then paying the joint account for budgeted joint household expenses.

I fall back on my banking experience here. I have seen too many situations where one of the individuals on a joint account cleaned the other out (typically the day after payday) and then skip town with a new love interest. Typically they take out everything with their name on it - checking, savings, money market accounts - and as a joint holder they have the right to do so.

Everyone thinks that it could never happen to them, but I've seen very strong marriages fall apart in a matter of weeks - and the financial consequences can be devestating for the individual left behind. I have had more future divorcees cry in my office than I care to remember.

[J in FL]

Well, I can't comment along with the married crowd in here, but I will say that in about 3 years of dating my girlfriend... money issues have come up. And we don't live together. So we have had the chance to talk about spending/saving ect and what we'd like to do once we're married.

[J in FL]

Oh yea, well, as for my opnion of joint vs. separate... I'm mostly in FMF's camp. I don't see the point, since it's all OUR money. But I think that somewhere between joint and separate is where we will end up.

p.s. FMF, when you insert a link in a post, is there a reason why the link is a click-through link, instead of a link that opens a new tab/window?

[FMF]

J --

"when you insert a link in a post, is there a reason why the link is a click-through link, instead of a link that opens a new tab/window?"

No. Would you prefer it otherwise?

[J in FL]

Well, kinda... but don't do something for just one person. Unless you are getting a bunch of these requests. It's not a make it or break sort of thing :)

[FMF]

I'll ask everyone else and see what they think.

[Brittany]

I got married about 3 months ago and was living with my now-husband for a year and a half before that.

I refused to combine our checking accounts until we were 'legal', and I have to say its a LOT easier paying rent, groceries, and other needs from one main account. We have individual and joint investment accounts, but we have a lot of rules about that since I work for an asset manager.

But then again, neither of us is particularly frivolous, and we do talk to each other before we spend over $100 on a want, so it works well for us.

[JK]

One way to "bear it all" is to pull a credit report on each person. My wife and I occassionally use one of the credit cards we carry that offer "Identity Protection" services. These are usually free for the first month, and allow you to pull your full credit report and see each person's in-depth credit history and credit score, which always brings back memories...

That parking ticket I got in Seattle with the rental car...

The first credit card I maxed out...

The Dillards card that I still carry and have NEVER used...

I'm sure yours will bring back some forgotten memories as well!

Sit down and talk about everything. Some of the info may be a couple of months behind, so a recent payment may not show up, depending on the frequency of reporting, but the list will be exhaustive.

I know of a few marriages that were ruined as a result of hiding this type of history.

Honesty is the best policy. If you can't trust your significant other, who can you trust?

[Jim]

I'm getting married soon myself. I'm glad to say that we've both been open about our financial situations. I also think joint accounts are a better way to go in general and its what we'll be doing. Having individual accounts or designated budget lines for personal / frivilous spending also seems like a good idea. I haven't talked with my fiancé yet about that so I might want to do so soon.

I could see doing separate accounts entirely the husband or wife have very different spending habits, since that would help reduce financial friction.

-Jim

[SavetothefFuture]

I'm also getting married this year. Thankfully, both of us have the same philosophy on how to deal with money. They say that money problems can really increase your chances of divorce. We want to make sure that we can focus more on our personal relationship and not have to worry about money (except for the monthly discussion of our budget).

We are planning to do a combination of joint and seperate accounts.

[Leanta]

Good advice considering there are over 7000 000 people in the UK alone who keep bank accounts and debts secret from their partners or spouces!

[Al]

I am getting married and own a home. I see a lot divorces out there. If I were to put my house in a living trust and make myself a trustee. Will I and my house be protected from divorce. Basically, she will never be to go after my house?

[Matt]

I used to share a account in my first marriage and I hated it, I never knew how much was in there. Also my wife made more money than me, but I realized that didn't matter, what mattered was that that she spent more money than me, and I was paying all the bills.

big life lesson...

so now I am pretty affluent and I talked with my future wife, I told her if she felt that she needed to have a joint account, then I will open one, but I am not using it. I will even deposit my paycheck in there because I work because it is my hobby.

for me it doesn't make sense to have a joint account but I could be wrong...