You’ve been dating for a while now, and
things seem to be going well. You have the same hobbies, you both love dogs
and kids, and neither of you listens to dubstep. It might be time for someone to pop the big
question… “What’s your credit score?” [MUSIC] Nothing kills the mood like prying into your
partner’s financial history, so it’s not surprising that many young couples will spend
hundreds of hours planning their weddings but almost none preparing their financial
merger. And that’s a big deal. J: Nearly one-in-three couples say finances
cause the most stress in their relationship, followed distantly by intimacy, children and
in-laws. More than a third of millennials in relationships
fight about money at least once per week! Which is troubling, because couples who disagree
about money once a week or more were over 30% percent more likely to get divorced than
those who disagree a couple times a month. A lot of this marital strife can be avoided
just by having a few honest discussions before tying the knot. It can be hard to broach the subject, so to
make it easier for all those young lovers out there, here are five financial topics
you should discuss with your future partner. What do you earn, what do you own, and what
do you owe? It can be difficult to reveal this information,
but it’s best to just rip the band-aid off. After all, lack of money is not as bad as
lack of communication. According to one study, 4 in 10 couples don’t
agree on what their partner’s income was. And 10% of them got the number wrong by $25,000
or more. Over one-third of couples disagreed on the
amount of their household’s assets. Good planning is impossible if each of you
only has half the information, and getting everything out on the table will only strengthen
trust. Philip and I suggest having this talk in two
parts. Send each other an email with a simple breakdown
of your finances and then a few days later come together in a non-judgmental frame of
mind to discuss the human story behind those numbers. How was money dealt with in your household
growing up? As much as we don’t like to admit it, we
are heavily influenced by the environment we were raised in, so learning about your
partner’s family traditions can offer a lot of insight and understanding into their
financial habits. Did they grow up on a tight budget? Did one parent run the show or did they share
responsibility? Were they ever taught to balance a checkbook? The second part of this conversation is figuring
out what traditions you each grew up with that you don’t want to replicate. Maybe your partner’s parents struggled with
debt so it’s very important to them to not get into that same quagmire. What will be yours, mine and ours? It’s becoming more common for couples to
keep separate accounts even after marriage. Maybe they’re afraid of losing independence,
maybe they just haven’t gotten around to it yet, but they might be missing out on some
benefits of a joint account like easier organization and transparency. If you and your partner decide to keep separate
accounts, make sure that you’re not creating places where secrets can hide. About one third of spouses admit to committing
financial infidelity, which means intentionally deceiving your partner about how you’re
spending or managing money. Of those, 16% ended up in divorce expressly
because of it. And remember, you don’t need to have separate
accounts to enjoy financial independence. Julia and I have agreed on a set amount of
personal splurge money per month. It’s always equal and we can do whatever
we want with it with zero discussion. It gives us space to be ourselves without
fear of lectures or petty squabbles. How much do you want to spend on kids? While most couples will talk about whether
they want kids, far fewer will discuss the massive financial impact–which can start
before they’re even born! About 15% of couples struggle with infertility,
and the cost of a common fertility treatment in the U.S ranges from about $12,000 – $15,000. The average private adoption costs almost
$40,000! Once you’ve got the kid, you have to decide
about daycare, public school versus private, and of course, college. Right now, the average cost of sending a child
to a 4-year public university is around $100K. It’s projected to be double that 18 years
from now! Of course, this is an ongoing conversation
that you’ll be having for many years, but it’s important to weigh the financial impact
of these choices as early as possible. What are your financial goals in order of
priority? Sharing your financial goals with each other
can actually be kinda fun! But in our experience, taking on too many
goals at once can make it less likely you’ll achieve any of them. If one of you is focused on buying a house,
and the other on starting a business, neither of you may get very far. But if you join forces and agree on what to
tackle first, both of you will get where you want to be faster. A 2015 study asked couples for their best
piece of financial advice to newlyweds. The top two suggestions were to save as early
as possible for retirement and to make all financial decisions together. Not all of these conversations will result
in firm agreements, but when they do, make sure to write them down in a sort of Financial
Constitution and then sign it! For example, we commit to check in before
we spend more than $200 on anything. It might sound unromantic, but it’s all
too easy for two people remember the same conversation differently! And you can always jointly decide to amend
your constitution! It’s not set in stone. Of course, if you’re already married, you
may have skipped over a few of these questions–but take heart! It’s never too late to bring them up and
turn a fresh page. And that’s our two cents!