Marriage introduces changes in a new couple’s financial situation that affect all aspects of their life together. Money is a critical part of that change so it is important couples identify how they separately deal with money and how they will do so once they become a couple. Following are steps they can take to get a better understanding of each other and to put some measures in place to take on a lifelong money journey.
Nominate a money boss!
Agree who will take the financial lead. Generally, one partner will have more of an aptitude for household finances so it’s best to agree who the money boss is going to be.
Have a shared bank account
A big concern that can arise in the event of marriage (or a couple starting to live together, co-habit also) is the lack of joint accounts between couples. This can leave some becoming vulnerable in the event one dies. This is especially important in the event of co-habitation where the surviving partner will not have access to the bank accounts. The problem here is a surviving partner can be stranded and cut off financially if the partner that died was the main income earner and important debts (mortgages etc) were paid from their account. So in such cases, especially in the case of critical household budget items, make sure there is a shared account.
Take a financial compatibility test
How similar are their financial personalities. In a classic sense, we often talk about savers and spenders but it goes much further than that. MoneyWhizz has developed a series of financial quiz options, including a Financial Personality test. Couples should engage to assess how financially compatible they are. Check out all of the MoneyQuiz options HERE.
Run a budgeting test
When it comes to a full household budget, how familiar are they with it? The best option here is for both to work through the MoneyWhizz Family Budget Calculator, they can use this tool to plan for the road ahead.
Set some goals
Discuss financial goals together. Do they plan to have children, buy a home, save for college, the list goes on. But whatever they might be, it is critical couples discuss what those are and more important, how they will have the financial means to achieving their financial goals. MoneyWhizz has developed a comprehensive guide on goal-setting, available here LOOK AT PAGE 2.
Is their credit history a construction site and a mess? It could mean that in the event of say buying a house, one partners credit profile is the path to home-ownership, the other might be a block. So be aware of what you are getting into. In Ireland, there are two credit reporting agencies; the CCR and ICB. It might be worth having a conversation about the condition of each others credit profile so that there are no shocks or unpleasant surprises later.
Put a Will in place
This is really important, especially in the event of the birth of children. It is a complicated legal area but married couples often wrongly assume inheritance rights of the estate in the event of a death of a partner. So instead of risking a lengthy probate court process, or worse, it is much easier to express one’s wishes through a Will.
Update Life Policy details
If they have them, make sure the husband / wife details are included on the policy in the event of a death.
It is important both partners are aware of accounts. From a record keeping perspective, it is good practice. And in an era when more people are likely to move around in their jobs, they are also, in some situations more likely to have more than one pension fund. This is more generally going to be a defined contribution pension which means the owner of the pension will have the right to take that pension with them. Put it on a list, include account details and share it with your partner.
Credit Union accounts
Here, it is important to update the Beneficiary. So, in the case of a marriage, perhaps there has been an old account set up years earlier. Perhaps the beneficiary on the account is a parent (it usually is). So, the marriage should necessitate the conversation between the couple about updating the beneficiary details.