By Ric Edelman
Congratulations! You're married-or about to be. And with all the incredible changes that it brings, some of the most important involve money. 141
Because money is one of the leading causes of divorce,142 your marriage's success could well be determined by the financial rules and habits that you and your spouse establish. Although this topic may seem mundane, seemingly innocuous questions such as who pays the phone bill are fraught with emotional charges, reflections of your upbringing, and definitions of masculinity, femininity, power, and self-respect, and therefore carry incredible implications for your marriage.
With the two of you sitting at the kitchen table, write down the answers to these questions. When you're done, exchange answers.
- How much and what kind of debts do you have? Make a list of all your debts, including for each:
- The name of the creditor;
- The amount of money you owe each creditor;
- The minimum monthly payment for each debt;
- The term of each loan (meaning when it will be paid off); and
- The interest rate each loan is charging you.
- What changes do you plan to make?
- When do you plan to make them?
- What will it cost to execute these changes?
- How will you pay for it?
- Should money be contributed to it by you, by your partner, or both?
- What percentage of income, should you or your partner contribute?
Be specific with your answers.
- How many cards?
- What is or would be your total credit limit?
- Which of you will use these accounts?
- Will the money to pay the charges made on these accounts be contributed by you, by your partner, or both?
- In what amounts, and in what frequency will these contributions be made?
- For how long?
- Which one of you will do this?
Don't bother looking in the back of the book for the correct answers; they aren't there. In fact, there are no “correct” answers-except maybe for Question #13. No, what's much more important is that your and your partner's answers match. Don't be surprised if they don't at first. That's expected. But, hopefully, your answers will not be so far apart that, through conversation and compromise, you can't reach understanding and agreement.
Don't worry if your agreements, which sound perfectly natural to the two of you, seem unconventional to others. Among my firm's large number of clients, I have seen hundreds of systems in use-from the couple who invests 100% of her paycheck, using his to pay for all of the family's expenses, to the couple whose husband abdicated complete control of the family's finances to the wife (“I tell him what I'm doing with the money, he gets mad and won't talk to me for two days, and then we both forget all about it-and we've been doing that for 42 years.”)-I can assure you that the system that's best for the two of you is the system that works for the two of you.
How do you define “what works”? Your system is working if:
- The bills are being paid on time.
- You are not increasing your debts; ideally, you are reducing them.143
- You are saving money regularly.
- Neither of you feels that you have been given undue responsibility for the family finances.
- Neither of you feels that the other is failing to live up to their financial responsibilities.
One thing you're likely to discover as you begin to meld your finances together is one immutable fact: You are going to have to change how you handled your finances before you got married. Being married is very different from being single, and this wondrous lifestyle change demands an equally tremendous change in how you approach personal finance.
So be aware of this: Being unwilling to change will prove deadly to your marriage. If you can't agree on these important questions, or if these questions provoke anguish, dismay, or conflict, then it's highly likely that there are serious matters afflicting your relationship. It's something you might want to think about, before you get married.
142 Or is it the lack of money?
143 Except for the mortgage, of course. See Rule #21.