Personal Finance

How to fix key money issues before getting married

Key Points
  • The winter holiday season is the most popular time to pop the question and, for the recently engaged, 2020 will be the beginning of a new life.
  • However, record student loan debt and other financial obligations can make money issues complicated.
Twenty20

For some couples, this winter holiday will be unforgettable.

December is the most popular time to pop the question and, for the recently engaged, 2020 will be the very beginning of a new life.

However, weddings are expensive, and merging personal finances can get complicated.

The average American wedding costs nearly $39,000, and more young couples are covering the tab themselves. To do that, a growing number of newlyweds-to-be are also relying on crowdfunding or wedding loans to help.

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Further, starting a life together comes with other financial obligations that young couples these days may not feel prepared for.

Record-breaking student loan debt, coupled with sky-high rents and wages that haven't increased much, have taken a toll on millennials — causing some to delay such significant milestones as marriage, having children and buying a first home, studies show.

The median marrying age is now 27 for women and 29 for men, up from 20 for women and 23 for men in 1960, according to the Pew Research Center.

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Even then, few feel financially confident. For most newly engaged couples, debt obligations can weigh heavily on future plans.

With finances being a huge contributor to relationship splits, New York-based matrimonial and family law attorneys Kelly Frawley and Emily Pollock, partners at Kasowitz Benson Torres LLP, offer the following advice on managing money issues before tying the knot.

Talk it out

"The biggest mistake you can make is not having a conversation," Pollock said. Beyond just words, exchange credit reports and tax returns, she advised; then, go over any late payments or other signs of trouble.

"It's important to get actual information and not just an impression of someone's finances from the lifestyle they lead," she added.

"There are a lot of people who are living and wearing signs of wealth that aren't supported by their assets."

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Are you marrying a spender or saver?

To that end, planning and paying for a wedding is often the first experience a couple has with how the other approaches large financial endeavors, Pollock said.

"Are they willing to go into debt to acquire something they want in the immediate future rather than save for the long term?"

It's a classic relationship quandary but if one person is inherently a saver and the other a spender, conflict will likely develop without an understanding.

It's also not uncommon. Across all age groups, spending versus savings habits are fairly evenly split.

Consider a prenup

If one person is in the red, Frawley advises couples to consider a prenuptial agreement specifying that any money put toward that debt during a marriage would be credited back off the top of the marital assets.

Prenups, which typically safeguard individual assets such as retirement accounts, real estate and investments, can also cover one partner's student loan or credit card debt.

That way, the person who is helping pay down the other person's debt would be reimbursed in the case of a split.

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