Disclaimer: The information provided is not intended as tax or legal advice and may not be relied on for purposes of avoiding any federal tax penalties. Individuals are encouraged to seek specific advice from their personal tax or legal counsel.
Personal finance requires dedication and effort. Marriage requires dedication and effort. Personal finance in marriage... well, you see where we're going. A successful financial situation in a marriage does not just fall into place. You must be deliberate about it and dedicated to it. Where to begin? It starts with making time for open conversations.
With more than 18 years of witnessing hundreds and hundreds of financial conversations between spouses, we've seen it all. And no doubt, there exists a trend between the "successful" situations and those that can be improved. The best of conversations start with an encouraging and positive environment, where both parties are seeking to further understand their spouse versus to be understood, recognize that they are starting on a path and not trying to solve everything in one sitting, and take turns listening and sharing. What we often learn in these conversations is that we each have very deep relationships with money and planning, typically stemming from our youth. Open and regular conversations with our spouse sets the foundation for a healthy financial relationship where both parties are involved and privy to your complete financial situation.
The basic recommendation here is simple: have the conversations early and regularly, and keep them positive. When they start to drift to "heated", as they surely will, take a break and come back later (but be sure to come back!). Recognize that these conversations can be difficult for all of us but can be really, really powerful, not just for your finances but also for your relationship. We recommend you begin these conversations when you are engaged and then regularly schedule them for every 4-6 months or with any life changing events like a job change or change to your family situation. Because we love lists, we created a starting point for you.
Set the mood. Find a common ground to start your discussions, where you have no distractions, nothing else needing your attention and a place where you both feel comfortable being open. Personally, we often have these discussions combined with a night out and a good microbrew to keep things light.
Start with a high level, broad finance topic to get your feet wet, like the following:
How do you feel overall about our personal finances?
What keeps you up and worrying at night?
What financial trigger points do you have?
How often do you think about our finances?
What financial habits did you establish in your youth?
What financial habits were you raised with? What did you see your parents do around money?
Once both parties are comfortable and sharing, dive into the specifics. Keep in mind these topics and questions are not meant to be addressed in one sitting; your financial plan is something you should develop and adapt over time. Specific topics to address include:
Total net worth: Are you both up to speed on where everything is, how much everything is and how to access it?
Budget: Do you have a budget? Do you need a budget (Yes, you do. It can be informal and not exact, but you need to look at it regularly).
Debt: Student, personal, mortgage. Do you have a debt payoff plan for any personal and student debt? Are you both aware how much is remaining on your mortgage, how much your payments are, and your approximate rate? Do you have refinancing on your radar?
Insurance (life and home/auto): Do you have the right amount of life insurance? Do you regularly check your home and auto insurance to make sure you have no gaps in coverage and are paying appropriate premiums? Do you need umbrella coverage?
Retirement: When do you want to retire? Are you planning for retirement? How much do you need to retire? What does retirement look like for you?
Income Tax Planing: Do you need a CPA or are you doing your own taxes? Do you have a CPA you trust? Are you doing tax planning during the year, evaluating potential capital losses in taxable investment accounts, looking at charitable contributions, evaluating tax deductible retirement savings?
Estate Planning: Do you have an up-to-date estate plan (wills, guardianship and trusts)? Do you need an estate plan? Do you need to talk to your parents about their estate plans and the impact that may have on your situation?
College Savings: Do you have college savings plans for your children? Are you regularly making contributions? Are you using the right savings plans based on your state of residence, the performance and tax impact of using your own state's plan? Are grandparents asking to contribute to education?
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