No one talks about money on their wedding day, do they?
Maybe they should.
The two biggest questions I get from my newly married couples are “how do we pay all this debt off?” and “what do we do with all these accounts?”
Many people now merge their financial lives with tens of thousands of dollars in student loan debt, car loans, credit cards, mortgage(s); because of high student loan amounts, even some shockingly young people are facing piles of debt before they tie the knot. Additionally, people are generally marrying later, which means they already have established routines and stable financial relationships – and usually many different accounts. There are a few simple rules to consider when discussing (and planning for) debt and account management in a new marriage.
Rule #1 – You don’t automatically become responsible for your new spouse’s debt when you marry. If it’s in their name only, unless you’ve co-signed for it, it’s their responsibility. Many people think that once they’re married they become obligated to the new debt. Not true. So, the rule is this: Don’t assign yourself to your spouse’s debts once you’re married. There’s no reason to become a joint account holder on their mortgage or credit card account.
Rule #2 – In some states, you can be liable for debts your spouse accumulates after you’re married. That means you need to be open and honest at all times with money. No one likes a surprise credit report ding.
Rule #3 – New marriage equals new banking relationships and credit relationships. It’s the cleanest way to do things. People change banks now like they change shampoo, so this really shouldn’t be an issue – both of you can keep your own checking accounts, but create a joint one at a separate credit union or bank that you agree on and use that one for household expenses. Same goes for credit cards. Don’t become “joint owner” on your spouse’s credit cards unless it’s a $0 balance.
Rule #4 – One person should be named on all utility accounts. Everything shows up on your credit report now, including your utilities (I learned this the hard way). To keep order, one person should be named on all utility accounts, i.e., electricity, water, gas, cable, phone, etc. That way if one person has issues, it only takes one person’s credit score down and the other remains fairly clean in case you need credit in the future.
Money isn’t complicated. It requires very little thought and discussion, but it does require some. My overall advice is simple: be honest and up front with the debt you’re bringing to your relationship and develop a plan together to pay it off.
Photo courtesy of: photographerglen
Being open and honest about finances is one of the most important things you can do in your marraige. If you aren’t, you are bound to face problems in the future.
I did not know that utilities showed up on your credit report. Better make sure I don’t miss those payments! Actually I should really get them all on auto-pay…
Good info about how debt from before marriage isn’t necessarily the new spouse’s. I hate to think of it that way since marriage is about being a team, but I totally understand the logic of not voluntarily putting debt on your name when you really don’t have to.
Neither did I! I’d discuss taxes before you get married too; there are financial benefits to filing joint most of the time, but there’s also self-protection issues you should be aware of and open about with each other. (Ex. Does he have an accountant buddy you don’t trust but he insists on using? You may want to insist on filing separately so your future tax returns aren’t garnished in an audit.)
I agree with Greg. Transparency is the number one thing! Be open and honest, and everything else will fall into place, provided you’re not secretly gambling all of the family money away…
Wow I didn’t know utilities showed up either. We never had the money talk until we were going to plan on having kids then we discussed it briefly. Now that we are in some debt we have been talking about it more and it is nice to get everything on the table so that my wife understands our situation. It was kind of those out of sight out of mind deals for a long time.
I never considered having both our names on our utilities – I guess because they only ask for one! But we alternate whose name is on them. Both of us need proof of residence and utilities are an easy way to get that.
We ended up moving our primary checking to a new bank because we couldn’t agree on whose bank to use! But we added each other to all our credit accounts as we never carry a balance.
Emily, the key you said was “as we never carry a balance”. That’s the most important lesson of all.
I had no idea about the last one. It makes sense to keep one spouse “clean”, also if you start a business that goes bankrupt, then the other spouse can take over… If you survived through that.
Couples need to engage in their finances like a team, with complete honesty and transparency. I am shocked by the numerous accounts I read of one spouse irresponsibly racking up a secret debt pile. What a nightmare! Thank you for the utility pointer, I also was not aware of this.
Good pointers. I did not know the part about the Utility bills. It is strange to me that a lot of issues about money would NOT be worked out before making a serious commitment such as getting married. I think that just like most things communication is the real key here.
My girlfriend and I know everything about each other’s finances so there should be no surprises when we get married, just a bit of work combining finances and making a joint budget.
I am not even sure we need four rules – I believe that there is only one rule of coupledome that ensures happiness. Talk to each other – you will probably argue, debate and discuss but this is the only way to avoid tedium in money, everyday life and sex.
If you get married before you start on a career, you might not have any money. It might seem strange to talk about money management if you have never had any. I think that was a problem my husband and I had. We should have had a plan, but failed at that. I would also add that you should never consolidate student loans together. If one of you dies, your loans are forgiven. If they are consolidated, you have pay for everything. Nice thoughts huh?
It’s so important to be clear in a relationship. I’m very fortunate that my husband and I share the same values. It really helps with furniture buying and money decisions.
My husband and I have always been very open about finances- it’s never been an issue. Before we got married, we both knew we were on the same page as far as long term goals. I think that is essential as well- both having the same end financial goals in mind. If you don’t, then I can see where conflict arises.
It’s hard to believe that spouses can hide financial indiscretions from their spouse. Transparency is essential in a marriage. I’d rather forgo new clothes then hiding the purchases from my hubby 🙂
Good advice — it’s definitely worth it to keep stuff separate, especially for new credit and utilities. Then, like you said, if anything goes wrong with one person’s credit for any reason, the other partner can take out the new loans as needed.
Financial talk or money management matters come as hindsight in most marriage. After the bliss and a couple of money problems later, the couple realizes they need to talk about their finances. Well, these are lessons learned and young people are lucky to have these pointers long before they plan to get married.
When I met my now-husband, he was pretty upfront about his student debt and overall poor ability to handle finances. He was happy to hand the reins over to me. We weathered a lot, but I got us on a track to pay off the debts he brought with him, and some that happened during our relationship. ($8,000 in oral surgery bills, anyone?)
If he had held back any of it — including his problems controlling his spending — we would have had a real problem. I can’t imagine getting that dumped on me once we’d already gotten married. Seems terrifying.