As we enter wedding season, we’ve put together a list of fundamental financial conversations to have with your partner before you get married. 

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During the dating phase, financial factors are often included in the internal assessment for overall fit (among the other obvious ones). But many stop short at financial indicators such as a home, nice car, and a good job. 

A 2022 survey of US adults in a relationship found that over 50% avoid talking about money^[1]. Another survey showed that many Americans do not know key financial information about their partners, like their salary, debt, investments, retirement savings, monthly spending, or even credit score.^[2]

Remember - once you’re married, past and future personal financial decisions impact your partner. Transparency builds trust and communicating proactively can reduce the potential for future financial issues. 

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Here is our list of fundamental financial conversations to have with your partner before marriage: 

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1. Share your financial past and present, in detail. 

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Start from the beginning by discussing your perception of how your upbringing shaped your relationship with money. This context can be powerful to cultivate empathy for each other as you come together to make decisions as partners.  

Once you have set the framework, provide each other with a summary of your current financial situation: salary, assets saved up or inheritances, debts (student loans, auto, mortgages, credit cards, etc), credit score, savings and spending patterns, etc. Even if your current financial situation isn't something you are particularly proud of, the purpose is to avoid surprises that could be detrimental to trust and strategize how you will work together to strengthen the partnership. 

When it’s all out in the open, you can start planning your financial life together. Conversation takeaways might include goals to pay off all consumer debts/student loans before marriage, build up savings for your first home and the dollar amount of each paycheck to allocate to it, etc. 

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2. Share your goals for the future; they have bigger financial implications than you may think. 

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Ask each other questions about the future such as:  

• Where do you want to live, now and in the future? 
  This one has massive financial implications from current cash flow, taxes, retirement timing, legacy planning to name a few.

• What are your career goals?
  Perhaps one of you would like to be a stay-at-home-parent, or start a business and need to have a few years of expenses saved for reduced income brought in, or go back to school for an advanced degree, etc.

• How would you want to handle unplanned setbacks, such as a layoff or caretaking for an elderly family member?
  While we can’t control what life throws at us, we can control how we manage our resources to withstand life’s uncertainties. Can one of your salaries cover the household’s bare minimum monthly expenses? Or do you have a more expensive lifestyle that requires both incomes to satisfy? Either way, it’s important to set up joint savings for emergency reserves. Talk through how many months of expenses to have saved based on your income type (e.g. steady or lumpy, demand of your expertise, industry of your company in relation to the economic cycle). Feel confident knowing you’re prepared, even for the unexpected.

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3. Discuss legal and estate matters that are easier planned for ahead of time.

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Now that you have clarity on each other’s total financial picture and future goals, talk through current and after marriage asset titling/registration/ownership (e.g. individual, joint, trust, business, etc.). If you live in a community property state, then any assets acquired after marriage are considered both spouses equally. Assets acquired during the marriage include income earned, anything obtained with those earnings, and debt acquired. 

Have either of you already completed estate planning like a Last Will & Testament or Trust? These may need to be revisited after marriage as a big life event often triggers the need for updates. In addition, you should review all of your beneficiary designations. Are there other people in your lives you want to ensure to leave a benefit that would be important for the other to know about? 

Is there a large difference in your current net worth, do you have vested business interests, children from a past relationship, or perhaps future inheritances? You may want to consider a prenuptial (aka a prenup). These legal documents may have a negative connotation, but there are many uses for them that benefit both spouses. For example, a prenup for a partner with children from a past relationship can protect the financial interests of the children should the biological parent pass away. Or, for a couple in which one has a poor history of debt management, a prenup could protect against creditors from collecting on joint assets.

4. Determine how you will manage the month-to-month household cash flows. 

Find a way for both to be involved in ongoing financial affairs. This further cultivates transparency, and prevents a surviving spouse from being left in the dark should something happen to the other to continue managing household financial affairs. 

A method that often works well is opening a joint checking account. Together you can determine how much of your paychecks will flow into that account to cover joint expenses. What is left in your individual bank checking accounts after is your personal discretionary spending. 

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5. Strategize how to optimize your tax situation. 

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First discuss how you have handled your taxes individually and any unique tax considerations you each may have. Then determine whether it makes more financial sense to file a joint tax return or married filing separately. 

Here are some considerations:

• When you file jointly, both are responsible for any taxes due.
• If one of you owes the IRS back-taxes (e.g. child support payments) or has a year in which taxes are due while the other would receive a refund, filing separately will allow the spouse with a refund to collect it.
• When both spouses work and earn about the same amount, filing a joint return might put a couple into a higher tax bracket, while filing separately results in a lower tax rate.
• When filing separately, both need to agree to itemize deductions or use the standard deduction.
• If one spouse has out-of-pocket medical expenses that exceed 7.5% of their individual adjusted gross income (AGI) but don’t exceed 7.5% of what would be their joint AGI, filing separately may result in a lower overall tax.
• Certain deductions and credits are not available when filing separately, such as the student loan interest deduction, education credits, credit for dependent care expenses, earned income credit, and adoption credit. 

Talking openly and honestly about your financial situation and goals with your future spouse is crucial for building trust and reducing the potential for future financial issues. By addressing the above topics, you’ll be on your way to a successful financial partnership with your partner.

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