It rarely comes up when they are just dating. But there are good reasons for couples to thoroughly discuss their approach to money before getting engaged. The Leaven talked to retired banker Chris Donnelly, who brings the added perspective of having recently seen his three children marry.
Q. There are many things that can cause strife in a marriage, but one of the perennials is money. What is important to know about your own approach to money before you marry?
A. You need to know where you are at financially. If you don’t know where you’re at, no one else will be able to know either. Living within your means is important. You need to know how much money you have coming in each month and prioritize your expenses, handling the most important items first.
Items such as food, rent or mortgage, health care and utility bills are the first priority. Once you cover all the top priority expenses, save for the future. You never know what the future holds, so you need to be prepared. Once you do that, then you can consider spending on things that are not important for living.
Q. What should a couple tell each other about their money habits and when should they start that discussion?
A. Every couple should create a money plan before they get married. Complete disclosure of your finances is important to any relationship. Identify and share your income and expenses with each other in advance, so you can develop a spending plan for after you are married. You want to avoid any financial surprises. Marriage is a full-time partnership. Partners should share everything, including financial goals and dreams. If both partners are going the same direction financially, it is easier to prepare for the future.
Q. What larger financial discussions should couples have while dating? Should they discuss the lifestyle they’d like to have, their priorities and goals, their commitment to their parish and the charities they support?
A. They should discuss their total income, expenses and current debts. Knowing things such as the number of loan payments due each month and other expenses is important. Excessive debt or loan payments can stress a family budget. Many people want a nice lifestyle without really knowing what their income can support. The couple must know their income and expenses first. You should not live beyond your means.
Q. Certainly, a discussion of children is warranted while dating. What should that discussion entail?
A. Children are important to figure into your financial plan. You have to think through the stages of your children’s lives. Things like day care, health insurance, clothes and extra food are important items to calculate into your monthly budget. Think ahead to estimate the additional expenses you might have with one or more children and budget those before you have children. You will be able to see what your financial situation will be before you actually have your first, second or third child.
Also, remember to add in a future savings plan for college or technical school. Helping your child with smaller or no student loans allows them to jump-start their future family financial plans.
Q. Once married, what are the pros and cons of separate checking accounts and two-income couples continuing to manage their finances separately? Is it something you recommend?
A. In marriage, everything is a partnership. The two become one. Separate accounts for handling may create a feeling of hiding something or imbalance. By planning in advance, you both will know the complete financial picture so there should be no hidden agenda or expense.
I recommend maintaining one joint account to show where all the money goes each month. Husbands and wives do a lot of things together. They should participate in everyday family finances as well.
Q. How about debt? Would you recommend the original borrower be the one to pay it off, or should it be a joint financial goal?
A. When you get married, it’s “for better or worse.” This means you take your partner with all the good and the bad they bring to the table. You should develop a financial plan in advance that includes how you will take care of loan payments together. If you both manage all the debt brought to the table, there is no question about where that debt fits into the financial picture. Having to guess what your spouse is doing with his or her money could cause serious problems.
Q. What should young married couples know about taxes?
A. Each couple should know how to properly prepare their taxes each year because taxes are a required expense. Tax problems can cause serious family concerns. You should add taxes into your family budget just like you would add food or rent. Knowing how to properly file your tax returns may also save you money.
Q. How should couples discuss whose job will be prioritized or how they’ll handle differences in salary, etc.?
A. By sharing all aspects of each other’s income and expenses and creating a financial plan and goals for the future, the couple can map out priorities, including job requirements. If neither partner is willing to make a sacrifice, then the financial plan will be much harder to achieve.
Q. How can couples remain on the same page about spending, savings and achieving their financial goals even while in the midst of busy lives?
A. Couples should discuss their financial plan and goals frequently. Life is a series of changes and curveballs. Ignoring financial discussions is a bad idea. If both partners are clear on where they are at financially, it is much easier to face the future.
Chris Donnelly is recently retired from his position as regional president of Country Club Bank. Before that, he was president and CEO of Bank of the Prairie in Olathe. He and his wife Susan are members of Sacred Heart Parish in Tonganoxie, where he serves on the parish finance council and where he and Susan co-chaired the parish capital campaign.