Be Open and Honest about Your Finances
Before a couple gets married they should have an open discussion around their finances. It’s critical to start off on the right foot when it comes to money. One reason this is important is so you know where you will stand financially as a couple. And knowing your financial situation can help dictate the kinds of choices you make. For example you may want to have an extravagant destination wedding and a vacation honeymoon. Or you might want to immediately buy a house together. Before making a large financial decision you should know how much you, as a couple, can realistically spend.
Another good reason to share this information is to build Trust. You want to be able to trust your spouse with things like your Finances. And be careful about hiding things. Because once trust is broken it can be impossible to regain. We have seen instances where someone lied to their spouse early on in the relationship. That trust was never regained again.
Know we are not telling you what to do. Everyone person and every couple is different. We are simply sharing some learning lessons based on our own experiences working with clients. For some people they may agreed to not talk about money. That is their prerogative and may work perfectly well for them. In our experience though talking about things like helps get things started.
What Information to Share:
It may be helpful to know how much each person has set aside in assets (stocks, savings accounts, retirement savings) as well as knowing their on-going income and expenses. It might be great to find out your significant other makes $20,000 per month, but not so great if they also happen to spend $25,000 a month. This is something you may want to know before getting married so you can both discuss the situation and how it will be impacted by the marriage. And as a couple you may both decide you need to make some changes in your lifestyle. That could help keeping the peace down the road as you are both being open and honest about your financial situation. Studies continue to show Finances are one of the biggest reasons some marriages end in divorce. We have seen our share of cases where not sharing information is the real problem.
Should a Married Couple get a Joint Bank Account
This is something you as a couple need to decide. In a lot of cases couples each keep their own bank accounts (savings, checking) and also get a joint account. The joint account can be used for joint purchases such as paying the rent or mortgage, groceries, utility bills, gifts, etc. They use their own personal bank accounts to keep purchasing personal items such as hobbies, sports tickets, meals out with friends. Getting married means you are now a couple, however you are still individuals as well. Your finances can reflect this via the use of different bank accounts. Before making a decision like this sit down and talk with each other about what makes the most sense. And consider seeking outside financial help. Getting an outside perspective could help take emotion out of the decision.
Should we hire a Financial Advisor
It depends on your financial situation. For our high-wealth clients we may recommend a financial advisor to make sure they are covering all of the bases. Some of the time they already have an advisor but that person may be beholden to their original client. So getting an unbiased advisor could be helpful. And this person can help determine how things should be organized. No one plans to get divorced, but thinking ahead even a little bit can go a long way in easing tensions and emotions if things go this way. And if you stay together you all will have a clearer picture of your combined financial situation.
Should we Get a Pre-Nup
This is a very personal decision which you as a couple should make. Don’t let others sway you one way or another. It’s very easy for your friends and family to say “You don’t need a pre-nup, you are in love right?” But if there is ever an issue down the road that same person might say “you should have gotten a pre-nup.” The reverse could be true as well. A pre-nup is helpful so you both know where you stand financially, and are better prepared in the event of a divorce. However, again, this is a personal decision so go into it as a couple.
Hiding money, real estate, cars is not a good thing to do. First off if you are hiding assets from your spouse then you should consider why you got married in the first place. That aside, if you hide assets, and get caught during a divorce proceeding things will probably not go well. We have seen cases where the other side hide real estate purchases which were done out of state. Even a house 2,000 miles away can be found. And when it is, there can be major penalties involved. So it may seem like a good way of hiding money and not splitting things equitably, but the risk is usually way higher than the reward. And if you are caught then you lose a lot of credibility with the other side, and with anyone watching over the case. If you think your significant other is hiding assets you should tell your attorney. They can sometimes help uncover hidden assets and work to get them handed over to you.