Financial Questions to Discuss Before Marriage

Yahoo lists four financial questions couples should discuss prior to getting married as follows:

1. What Are Your Assets and Liabilities?
2. What Is Your Money History?
3. How Should We Divide Financial Duties?
4. Do We Combine Accounts or Operate Individually?

I've told you all before that my wife and I lucked out in this area -- we are totally financially compatible and see eye-to-eye on most money management issues. But we didn't discuss finances at all before marriage (like most people) -- at least not in very much detail -- and ran the risk of a major disaster if we had been completely different from one another in this area (as many couples are.)

As for the above list, here's how we work the two issues that remain parts of how we manage money:

• We divide financial duties into roughly these groups: my wife plays great defense, helping us keep our spending low. She also manages all of our healthcare-related forms, expenses, etc. I handle most of everything else (record keeping, investments, taxes, etc.) as well as concentrate on playing great offense (i.e. making the most of my career.) I play decent defense too. We make all "global" financial decisions together.

• There was never a question for us -- all of our accounts are held together. I can't imagine a marriage where I had "my money" and she had "her money." Ugh. That just sounds brutal to me. Now we have set up personal accounts so each of us can buy some things we want/like without the other's opinion being needed, but they aren't a really big percentage of the budget. And as we've gotten older and now have much of what we need, we never spend the full amounts in our personal funds anyway.

How about you? How do you (or how do you hope to if you're not yet married) divide the financial duties? And do you go with joint or individual accounts?

Comments

[Tyler]

I'm not married, but fully expect to be one of these days.

There will be her account, my accounts, and joint accounts. Her money, my money, and joint money. Things that can be kept separate and defined will be kept that way.

I can only imagine the stress on a relationship that must exist when two people are coming from opposite ends of the spectrum on financial issues.

[Larn]

My husband and I got married last May. We combined our money but made two separate "allowance" checking accounts that we put $150/mo each. The accouts are used for little things that don't necessarly benefit us both (me: shoes, him: beer). We love not having the pressure of "keeping score" on who bought which non-family item.

[Budgeting in the Fun Stuff]

I just posted about this on my blog yesterday. :-)

My husband and I have joint everything...it was his idea and he was right. It's great for us since we mesh very well financially.

We are both frugal and play a good defense. He spends more than me on hobbies, but that's not his problem...I have no real hobbies. Our early retirement goal would be impossible if we weren't both on the same page.

Since I'm more detail-oriented when it comes to daily finances, I keep track of everything except our Scottrade account (stocks bore me and he loves them). He'll also be in charge of our second Roth IRA. I enjoy handling everything else and he seems to appreciate being able to get updates whenever without having to do any research. We both know all our accounts, user names, and passwords...he just rather not deal with it.

My favorite part is surprising him with our updates...savings can sneak up on you if you ignore it for a few months. I'm posting our monthly net worth on my blog to keep myself entertained.

[guinness416]

We discussed this stuff long before we got hitched, around the time we moved in together. We were young though, just finishing college, so the conversation wasn't all that long although it was pretty clear we were very, very different money managers.

Our savings and investment accounts are joint but our chequing accounts separate; I've yet to see a good reason beyond Nicholas-Sparks-esque "we're spiritually combiiiined" not to, but accept of course that other approaches work for different people. I earn much more than him but we just pay different bills and contribute different amounts to savings/investments. It's pretty low maintenance and mostly automatic; I have no interest in any financial system that creates work or for that matter checking up on what he spends his disposable on.

[Old Limey]

I was raised in the old school (now out of date) where the husband was supposed to be the breadwinner. During the years that my wife worked I paid all of our expenses out of my salary and she saved her salary in an individual account and while working she paid for her own personal expenses such as hair, cosmetics, clothes etc. At that time the word "Divorce" wasn't in either of our vocabularies so that financial arrangement worked for us but is probably very unwise in today's world of very high divorce rates.
Eventually after we retired we set up a Joint Living Trust and at that time her separate account was merged into the trust's investment account. IRAs of course are held in separate names but the small credit union savings/checking accounts ($25K each approx.) that we own today are held jointly, even though she has hers and I have mine. It's not a good idea to have two people using the same checkbook. In fact since my wife doesn't use a computer she is happy for me to take care of everything financial, even paying her bills and balancing her checkbook. In return I don't interfere in the kitchen unless my help is requested (primarily for chopping).
We never discussed financial arrangements before marriage. Since when we stepped off the ocean liner that took 5 days in huge Winter storms to bring us from Liverpool to Montreal in 1956 we had $400 and no return tickets so there wasn't anything to discuss. My wife was seasick the whole time. We were a team then and we are even more of a team today.

An interesting story my hiking pal told me on Monday was about his mother (now deceased). He took out her rotary dial phone and put in a cordless phone so that she wouldn't have to remember phone numbers. One day he went to see her and she told him that she couldn't get the TV to come on any more. It seems she was using the cordless phone instead of the TV remote. Pretty soon she had him put back her rotary dial phone. I have also reached the point of hi-tech overload. I have an ancient cell phone that I only keep in case of an emergency (it's never had an incoming call), my friend's I-Phone blows me away with its incredible capabilities but I don't want one. It was bad enough going through the 138 page manual that came with the portable GPS device I use when I go hiking, to save me from getting lost.

[Rod Ferguson]

Much the same as you, FMF. While we are both playing "offense" and "defense", she's mainly defensive and I'm mainly offensive in addition to handling the books. We fell into these roles naturally due to our natural inclinations and abilities.

We only brushed the surface of finance when we got married (brought up the whole assets vs liabilities, savings, etc, but never went into financial personalities, history or any of that). We did decide, with the same feelings you have, that there was just "our money", althougth we have multiple accounts that serve multiple functions (one "land development" account, one "school maintenance" account, one "household finances" account, one "savings towards one big home improvement" account, one "rainy day" account, etc.) We both have full access to all accounts, although we do have a rule with each other: if we plan on spending more than $100 that isn't part of the normal budget, we consult the other first. Usually it's fine, but that rule has helped prevent us from going cash flow negative for the month more than once, and allows the other person to be financially aware of what the other is doing (like when she decided to beef the garden up and had figured on an extra $500 in supplies that I didn't know about - when she checked to see if she could spend $120 on seeds and planters for seedlings, I became aware of the rest and was able to plan the budget around it).

[A Girl and A Boy who love each other.]

I have been married almost 6 years. I get scared about what would happen to the finances if something were to happen to me. My hubby has no interest what-so-ever! He is great at following our budget and does not spend a lot of money. We are great at talking through any big ticket items we buy. We share a checking and savings account. (However we have 100.00 a month for fun in separate accounts.) I do all the investing, paying bills, managing the budget and such. I wish he had an interest.

[MasterPo]

A good topic.

MasterPo doesn't care for joint accounts. MasterPo and Mrs. MasterPo don't have any (other than the mortgage). MasterPo is funny that way.

Works out well for us. Never had the problem of "his money"/"her money".

[Budgeting in the Fun Stuff]

MasterPo (or anyone else with separate finances), how are you two planning your retirement? Would one of you hold off on retirement if the other still has a couple of years or more to go? Or does the other one cover the difference?

Honestly, that's my biggest question about separate finances...what happens when one of you is ready to retire and the other isn't? Also, how do you two pull off big vacations - does one of you pay or do you split the costs? What if one of you doesn't have enough?

I'm not against separate finances, I just don't understand how it can work without resentment...

[Mike B.]

I'm pretty much in FMF's boat. We didn't talk about it (other than I think once she said something like 'I think having separate accounts is idiotic') and we have all joint accounts. I take care of everything which I think works well, she's a little to high-strung to deal with the monthly ups-and-downs. We both are frugal and like to save money, so mostly it works well.

I really can't imagine it any other way (with the exception of just having a small account for each to have a little disposable income per month--that seems OK, but I could probably do the same with an Excel spreadsheet). Almost everything we spend on is 'for the family'. Sure, I wouldn't have bought that couch and she wouldn't have bought that TV, but I use that couch a lot and she watches that TV a lot. And we have kids, so how do you spend on them if you aren't completely joint?

[JAG60]

joint accounts work well for 2nd time arounders, as having to split up your assets once (or more) in the past is ample motivation for a little bit of wariness, especially if one of you makes more/has greater assets. The planning for vacations and big ticket items is an issue, and can only be worked out with communication. My husband and I have been married just a year, I am 49 and he is 39, and I earn/have more. We just ran into the vacation issue(a trip to see his son), and will be setting some time aside to talk about that and other joint financial matters (he does not know that yet!)

[JAG60]

I meant SEPARATE accounts with a joint account for joint expense (decided on together)work well - obviously time for more coffee!

[April]

I own two homes. I was engaged on 5/2011 and am postured to be married in November. My fiance did not put any money down on any of my homes. We moved in together one month ago. I purchased the second home for us to live in. His credit is shot with a recent foreclosure in 5/2011 from a six year previous marriage that ended in 5/2005. His ex wife let it go into foreclosure with his name still on the home. His former business partner claimed bankruptcy on a business two months ago which is 6 months after the time my fiancé dissolved his name from the business. My understanding is my fiance may now be liable for any joint debt during the business partnership. I have five children from one single previous marriage ages 23, 21, 19, 11 and 9. My fiance believes the older ones should be on their own financially. I agree; however, I contribute nothing to their college education I’m sad to say. The two minors (ages 11 and 9) receive $1500 in child support monthly. I pay for all the bills, including the two homes I own which include providing for his mother to live in one of my homes. She contributes $300 monthly to the rent. It would normally rent for $750/mo. She lives on social security exclusively. I’ve read your material and you recommend no pre-nup to which he has said “no” anyway. I’m guessing my equity in the home is protected since homes were purchased before marriage. It’s all I own. I have no retirement, 401K etc. He has IRAS and 401Ks but says his mom is the executor and his children are beneficiaries to which I am not entitled. He said if I want money protection after marriage, I can get life insurance on him but that seems wrong to me. I suppose he should get it on me since I may be worth more dead than alive. LOL At age 50, I have not done too bad for myself financially as a divorcee of 6 years in making a go of it alone. Any general financial or love advice for me. Thank you very much!