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Few people like to talk about money. But couples who can honestly communicate about their finances before they get married will be in better shape for the future, says Elle Kaplan, finance expert and founder of LexION Capital.
"Almost every one of your relationship milestones is connected to finances, yet money is often seen as a taboo subject to bring up, even when you're tying the knot," she says. "That's why I tell couples to start talking about their finances as soon as a relationship turns serious. If both partners start discussing money early, they can work together and make compromises to take their relationship to a whole new level."
To get you started, here are six money questions you must ask before you say "I do."
1. What are your spending and savings habits?
"Spending and saving habits absolutely need to be discussed before getting married," says Kaplan, who explains you can't take for granted that your money philosophies will magically align. Everything from your upbringing, income, and even the media color your and your partner's financial feelings. "We often don't even think about our own money habits, but how you both approach money is going to determine if your goals can be reached in marriage," Kaplan says. "Impulse spending, for instance, is a behavior that needs to be addressed and resolved before getting married."
2. What is your income?
We've been taught it's not polite to ask another person, even our partners, what he or she makes. But what you each bring home, says Kaplan, "touches almost every aspect of a relationship. Where you both can live, how much you can save, and even your quality of life is affected by your joint income." Because of this, she says, you must be willing to share your income with your soon-to-be spouse. And with that information disclosed, "you should figure out if your joint income will be enough to support your relationship goals, or if it makes sense to prolong some of them," she recommends.
3. How will we save for retirement?
After you've tied the knot, Kaplan says, couples often stash their money in savings for a first home or a big vacation. "Boring things like retirement often get left in the dust," she says. "But this is definitely not the time to forget about your golden years, because it's exponentially easier to plan and save the earlier you start. Couples can avoid scrambling later in life by taking small steps today."
4. What is your credit score?
This three-digit number can make a big difference in your relationship, Kaplan says. "Credit scores might not seem like a big deal, but you'll be in for a big shock if you get denied a loan for that dream home due to poor credit," she points out. So before your wedding day, reveal your respective numbers and avoid unpleasant surprises down the road. "Yes, you'll both still have your own credit history, but lenders typically look at both spouses' scores when approving a mortgage or determining its interest rate," Kaplan reminds us.
5. What debts do you have?
It's a sad fact, but "almost every American has some form of debt," says Kaplan. And yet, despite the fact that most American carry around a student loan or two, "it's a still a sticky subject to bring up with a partner," she says. "Not all debts are created equal; there's a big difference between 'dirty debt,' such as high-interest credit card debt, and 'clean debt,' such as low-interest government student loans. High interest debt can quickly snowball and drive a chisel into an otherwise amazing marriage. If partners bring this up early, they can come up with a game plan to tackle it together and move upwards and onwards."
6. How will we combine or keep separate our money?
Many couples take for granted that after they tie the knot, they'll simply share everything from bank accounts to credit cards. But that may not be the right move for you. "While marriage is indeed a union, your finances aren't going to automatically be combined into one account after saying 'I do,'" she says. "It's important to discuss whether you'll merge your finances into a joint account, or maintain individual accounts. What works for many partners is to have a joint account for large financial spending, and individual accounts for day-to-day spending. Either way, you'll want to set up a system where there's financial transparency, especially for larger purchases."