elderly mother with mid adult daughter on beach

What’s Love Got To Do With It

Women, money and marriage

Sacha Millstone sits down with journalist Ericka Lewis.

What’s Love Got to Do With It? (Everything)

Falling in love and getting married is romantic. Talking about money? Not so much. Yet Sacha Millstone explains some financial implications of marriage and children women should consider.

Ericka: What are some financial adjustments people might experience after getting married?

Sacha: At first, it might be just that you are not used to sharing a budget with somebody, or you might have very different approaches to money. In fact, usually a spender and a saver will get married. So there can be a period of getting used to each other’s patterns of behavior, and the different ways that both parties handle money. In the end, I think the question of keeping finances separate or commingling funds is really a matter of personal preference, but the discussion is important.

The True “Cost” of Motherhood

Having a family can enrich women’s lives – but lower their income – for decades.

Ericka: How can marriage affect women’s careers?

Sacha: When a couple decides to have a child, the woman is often the one that steps out of the workforce. Even when temporary, this has a huge impact – not only on her career trajectory, but on her lifetime earnings. For example: when she returns to the workforce, her salary might be lower because her skills may not be as current. Also: she’s missed contributing to her retirement plan and getting that employer match for a period of years. Since investments made earlier in life are the most profitable (due to the value of compounding interest), having kids can be a significant cost, especially for the mother, that many couples don’t discuss in advance, or even fully understand.

Mitigate the “Mom Tax”

Sacha offers advice on financial planning before having children.

Ericka: How can women protect themselves financially when they start a family?

Sacha: Consider working with a financial planner to analyze the cost of this change, preferably before it happens. Couples may think of it as sacrificing just “a few years of salary,” but that is not the full cost. Once they understand the full financial implication, they may make the same decision, but at least they will have more information and can make an informed decision. If the mother steps out of the workforce, they might plan to boost their savings rate down the road to compensate for the years of savings, employer matches and returns that were lost to child-rearing.

To Prenup or Not to Prenup?

The case for prenuptial agreements.

Ericka: Prenups are a touchy issue with a lot of couples. Who really needs one?

Sacha: Everyone should have a prenup and almost no one does! It’s much easier to discuss financial issues when you’re getting along than when you’re fighting. The reality is that marriage is a contract with legal ramifications – 50% of people unwind their first marriage, 70% unwind their second. Most divorces are caused by financial problems. How much better would it be to have the agreement in advance about how you are going to handle a divorce if it becomes a reality?

Having a conversation with a financial advisor can clarify the long-term impacts of important choices. I wish couples could understand that it’s actually a very loving thing to do early in a relationship, rather than during a time of great conflict.

All opinions expressed are those of the author and not necessarily those of Raymond James. Opinions expressed are as of this date and subject to change at any time without notice.