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May 17, 2019, 1:24 p.m. EDT

Something blue, something green: what couples need to know about money before marriage

5 steps to a financial happily ever after

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By Angie O'Leary


Everett Collection
It’s the first day of the rest of your life.

Love & Money is a MarketWatch series looking at how our relationship with money impacts our relationships with significant others, friends and family .

First comes love. Then comes marriage. Then come…financial responsibilities.

We’re approaching wedding season, and amid the talk of cake and flowers should be some frank talk about money, not just the cost per plate on the big day, but the short- and long-term financial implications of bringing two people together in one household.

Even in first marriages, people are tying the knot later in life now than ever before. In 2018, the median age at first marriage was nearly 30 for men and nearly 28 for women. Thirty years ago, it was 26 and 23½, respectively. That means people are coming into these partnerships with several more years of personal financial history under their belts that must be considered and reconciled.

Waiting until each partner has achieved a certain level of financial stability may play a large role in when couples decide to get married, especially given changing social and economic factors like extended stints in higher education and the accompanying debt. But once a couple has made that decision, there are some key “money vows” they should take to ensure they’re on the same page.

First, talk openly about financial values. We all go through life with a set of ethics and goals related to our money. Beyond major life choices such as having children and owning a home, it’s important for soon-to-be spouses to know if charitable giving, international travel or other large expenses are part of one partner’s personal and financial identity. It’s a worthwhile exercise for both of them to write down their priorities separately, then compare lists and discuss where they overlap and where compromise is necessary.

Many marriages don’t survive the wealth-planning and building phases because only one, or neither, of the spouses is totally committed to a shared wealth plan, so being clear about goals and values upfront can alleviate a lot of tension.

Next, take a hard look at each partner’s individual financial situation. Before combining their assets, it’s important for each spouse to have their own house in order. A financial inventory should include everything from personal monthly income to savings to credit card balances to student loan debt. It should also account for monthly expenses and how they will change post-marriage. With young couples getting married later, decisions about ownership and titling of prenuptial assets should also be considered.

At this stage, it helps to decide whether outstanding obligations will become “couples’ debt” or if each partner will continue to take ownership of their liabilities. This can be a tough negotiation if there is a large disparity between the partners’ situations, but hashing it out before the big day can head off surprises and arguments down the line.

Be honest. The foundation of a strong relationship is trust, and this is especially true when it comes to money. Before coming together in marriage, both partners must be willing to open the books and be honest about any past financial troubles or debts that may come to bear during the marriage.

This is not a one-and-done conversation. My colleague, wealth strategist Malia Haskins, suggests that couples should schedule a regular “money date” to talk about finances once or twice a month.

Make a savings plan — together. In this instant-gratification age, it takes a lot of discipline to set funds aside for the future. When couples are relatively young and thus have the luxury of time on their side, they should aim to save at least 10% of every dollar they earn in a long-term, “untouchable” account, like a workplace 401(k) plan, IRA or Roth account. The particulars can be discussed with the help of a financial professional, but the commitment to saving for the long haul needs to be enthusiastically taken up by both halves of the couple.

Have the tough conversations. Two of the most financially devastating life events are divorce and the unexpected death of a spouse. Even when a couple is first starting out, it’s important to think about how they’ll protect their assets in light of an unfortunate event.

A lot of people put up a mental block about the possibility of such events, so they avoid talking about them. But drawing up a will or trust, or establishing a prenuptial agreement, can make a life-changing difference in a devastating scenario. Prenups don’t carry the same taboo as they once did, and they can offer important protections, especially if one or both partners is coming to the marriage with significant personal assets, and/or if there are former spouses or children from previous relationships in the mix.

Wedding planning can be stressful, but a wedding is only one day; a marriage is, in theory, a lifetime. For that reason, couples shouldn’t give short shrift to the topic of money, which will realistically impact most of the decisions they make together. Having an honest, open dialogue and coming together to plan around the financial aspect of an impending union can make all the difference in the success of a marriage.

Angie O’Leary is head of wealth planning for RBC Wealth Management - U.S .

RBC Wealth Management does not provide tax or legal advice. All decisions regarding the tax or legal implications of your investments should be made in connection with your independent tax or legal adviser. Investment and insurance products offered through RBC Wealth Management are not insured by the FDIC or any other federal government agency, are not deposits or other obligations of, or guaranteed by, a bank or any bank affiliate, and are subject to investment risks, including possible loss of the principal amount invested. RBC Wealth Management, a division of RBC Capital Markets, LLC, Member NYSE/FINRA/SIPC .

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