Nine Major Money Mistakes That Can Derail Your Marriage
If a saver, ask why that’s important to them.
Perhaps her parents were always in debt and she wants to avoid the same fate.
Or maybe he sacrificed luxuries for many years, by putting himself through college and saving for a house, and now want to indulge in a less conservative lifestyle.
Be prepared, of course, to discuss your own financial philosophy as well, which will help you better appreciate the boundaries you bring to your marriage.
What's Your Risk Tolerance?
The old adage that opposites attract is as true with personality types as it is with investment styles.
Rare is the couple that agrees entirely on asset allocation for retirement accounts.
Those on the conservative side might prefer dividend-paying, blue-chip stocks that typically produce a steady return, but slow growth.
Aggressive investors, meanwhile, might be willing to roll the dice on start-ups, tech firms and energy stocks that are more volatile, but hold the potential for hefty returns.
Find out the risk tolerance of your other half, be honest your own, and develop a plan for investing joint assets.
“There’s typically one person who ends up taking on that responsibility [of investment planning], but they might invest more aggressively than the other person is comfortable with,” says Norris. “Or, they might be too conservative so the other spouse ends up squirreling money away secretly to go off and blow it on gambling.”
What Are Your Goals?
You should also share your financial priorities, and set goals to achieve them.
Do you wish to purchase a home, retire by 55, buy a boat?
For any agreed goals, you should start saving a percentage of your monthly income in a separate account.
You can also agree to funnel any “new money” (year-end bonuses, for instance) into the account for a fixed period of time to help you get there faster.
If your goals diverge, however, it’s time to start compromising.
Ask your soon-to-be spouse to rank his priorities in order of importance and you do the same.
Next, decide which are attainable, which need to be downsized and which should be cast aside.
All of this, this does not guarantee that you will avoid arguing over money matters altogether. Most couples do.
They will, however, head off some potential problems.
And above all else, they’ll help to establish the foundation of mutual trust necessary for your relationship to thrive.