About the money …
I’ve handled countless divorces for first, second, third, and even fourth marriages, and I can say the two reasons most couples fall apart is incompatibility around sex, or money, or both. The more clarity about these areas you have at the beginning of your relationship the better off you will be over time.
Let’s start with finances. You can avoid a lot of pain and misunderstandings in your marriage by having the right discussions about how you will manage your financial accounts and lifestyle, then draft documents specific to your wants and needs. A gentle way to approach this is to simply ask, “Do you think there are any financial issues we haven’t discussed yet?” More than likely, you’ll think of a few. To help you out, I’m going to give you four questions for each conversation topic that you’ll want to cover. You and your future spouse should be comfortable talking about and agree on all or most of these issues.
Here are my four must-ask questions:
- What’s your ideal residence—urban or suburban?
- What’s your idea of a family budget?
- What’s your ideal work-life lifestyle?
- What are your expectations for financial accounts: income, spending, and savings?
Let’s go over each one in detail, starting with your ideal residence. If you haven’t talked about where you’re going to live or how the ownership of your property will be handled, this is the opportunity to open the subject when you discuss urban or suburban living. This is very important because one of you may dream about a big house in the quiet suburbs and the other may want to live downtown in a high rise, or far from the city in a rural home with lots of land, or, on the lake or beach. Expectations and stress about lifestyle can slowly erode the good feelings between you and that effects your intimacy, which eventually affects your marriage.
If you start with the issues that surround your home, the rest will follow. You will need to discuss monthly payment, the names on the deed to the home, ownership of a second home or other property purchased during the marriage, and what happens in the event of death or divorce.
This topic opens issues about money coming in and going out, which leads to how to handle the recurring monthly expenses and practical issues about how to budget for the family. What’s your idea of a family budget? You can pivot there with a question like, “Do you believe in having a family budget?” You’ll learn if you match up or not on saving and spending. Who pays for what will have to be decided, along with joint and/or separate bank accounts. Plus, you’ll see if your ideas match up about how you’ll pay for groceries, car insurance, entertainment, and other discretionary items, like vacations. Don’t leave it to chance about vacation decisions, like cost, where, and when to go.
As you sort through all these issues, work-life is going to come into the picture. What’s your ideal work-life lifestyle? Discuss your dream jobs and how many hours you want to spend working apart to make money. Start sharing ideas for your dream retirement. If you have a disparity in income, decide how you’ll resolve these issues if you keep your income separate to contribute toward the purchase of a home, everyday living expenses or retirement. What if one of you is a stay-at-home-parent and produces no income whatsoever? What will be in place so he or she maintains a checking account or builds a retirement nest, in case of divorce?
Much of the success of your relationship will depend on the lifestyle you envision together. It has been my experience that not very many couples actually talk to each other about these things because the next natural subject is disclosure of your financial accounts, including any debt either of you might have.
What are your expectations for financial accounts: income, spending, and savings? Find ways to discuss how important making money is to both of you. Do you line up on financial goals? Discuss how you’ll pay down debt brought to the marriage. And, if your spouse is going to contribute, does it have to be repaid in the event of divorce? To that spouse, are you ready to take on the responsibility for repayment of this obligation? If not, your prenup needs to address it.
This issue can come up rather quickly if one of you has outstanding obligations to the IRS. Ask the question so there are no surprises. And check with your CPA about how the IRS treats outstanding income tax obligations when the one who owes back taxes gets married.