20 Financial Things Couples Should Know

Lifestyle

20 Financial Things Couples Should Know

Having a solid understanding of your financial status is crucial to planning, budgeting and saving toward your goals.

October 27, 2016

More than 40% of couples recently unveiled that they don't know how much their partner earns. And 1 in 10 couldn't guess within a $25,000 margin of error. These couples, who share their lives together, have no idea what their total household income is. Yet, the majority of those same couples claim they regularly have open conversations about their finances. There's a disconnect somewhere.

The Couples Retirement Study by Fidelity Investments revealed that many couples could stand to dive a little deeper when it comes to their joint financial lives. Having a solid understanding of your financial status is crucial to planning, budgeting and saving toward your goals. However, many couples opt to divide and conquer how they manage money, bills, assets and debts, which could leave one or both in the dark about important financial matters.

Cross-training, so to speak, makes it easier for the other partner to keep things running smoothly if your personal chief financial officer is no longer willing or able to do the job. And because women tend to live longer, at some point, they'll likely be the ones to run the show on their own.

So, it makes sense that both partners, whether you've been married for a month or decades, collaborate when it comes to financial planning, money management and decision-making – sharing the responsibilities of building and protecting your financial future. 

Start by scheduling regular “money dates,” where you check in with each other and openly discuss a range of issues, including earnings, borrowing, spending, saving and investing. To get – and stay – in sync, make sure you know detailed answers to these questions and communicate about money matters as well as everything else.

Past

1. Do we have any financial secrets? Marriage is about love and trust, so when you're discussing money issues, talk about your debt, obligations, past mistakes (e.g., credit cards, student loans, alimony, an ill-timed business venture, bankruptcies, liens or foreclosures) and what you learned from them.

2. How do you view money? Talk about your values (e.g., whether you're a spender or a saver), how you use debt and the role money has played in your life. How you deal with financial stress and largesse can significantly affect your marriage, so be sure to talk about successes and what concerns you.

3. Are we financially savvy? Ask yourselves how comfortable you are with your knowledge of investing and experience managing money.

Present

4. How much do we earn? This basic number informs all your near and long-range planning. Include bonuses in your tally and consider your future career goals and earning potential as well.

5. What's our budget? Do you know your cost of living? Is it below your means? Can you save for future goals?

6. What bills do we have? How much are they? When are they due? And which account are they paid from?

7. What do we own and owe? Take inventory of your collective assets and liabilities: property, insurance policies, bank, retirement and brokerage accounts – pretty much anything that involves money. Be sure to include business assets and liabilities, too. You need a full picture of your total net worth as a family.

8. How are our assets protected? Large assets like homes, cars and businesses should have corresponding insurance policies.

9. Where's our emergency fund? How much is in it? Is it titled in both our names so we'll have ready access should the unexpected happen?

10. What is our current tax bracket? Federal, state and local taxes can affect your take-home pay, so it's important to know what percentage is being taken and look for ways to minimize your tax burden.

11. What are we saving for? Funding an education for your grandkids, buying a lake house, a vacation, retirement? You need to know what your short- and long-term priorities are and diligently save toward them as a team.

12. How realistic are our goals? What tradeoffs are we willing to make to achieve what we want as individuals, a couple and a family?

13. What are we willing to invest for the future? More than a third of couples disagree on how much they have in investable assets. Once you've completed your budget, you'll both be better aware of what you can set aside for your short, mid- and long-range goals.

14. How much are we willing to lose? Has our risk tolerance changed?

Future

15. What will we need to live comfortably in retirement? Know how each of you envisions the future; then plan, save and invest accordingly.

16. How much are we saving for retirement and where are the accounts? Keep track of your 401(k)s, including ones from previous jobs; IRAs and CDs that are dedicated to retirement; how much you're contributing; and whose name is on each.

17. How much will we receive from Social Security? Even couples just shy of retirement don't know how much to expect from this important source of income.

18. Are our estate documents in order? Regularly review wills, healthcare directives, letters of instruction, insurance policies, powers of attorney and beneficiaries to make sure your wishes are well documented and stored in an accessible, secure place.

19. Where are important documents kept? Are our wills, living trusts, powers of attorney and healthcare proxies updated and stored in a secure spot? What about our tax records?

20. What will happen when one of us passes away? Estate planning, including writing a comprehensive will, sets up contingencies to help ensure your family is taken care of after the loss of one or both of you. You'll want to determine how your spouse, children and/or grandchildren will be provided for and how you will divide assets. Things can get particularly complicated if you own a business together. So it's essential to have documentation in place to protect all parties involved.

Communicate
The questions suggested here are mere guidelines to building and maintaining a strong financial foundation throughout your marriage. To keep the conversation going, strive to keep your money dates and attend any upcoming appointments with your professional team, including your lawyer, accountant and financial advisor. Doing so should help you better monitor progress, gain objective advice and make important decisions together. The point is for each partner to be as comfortable and as knowledgeable as possible when it comes to your financial past, present and future.

Conversation Starters

  • What's the most expensive thing you bought on impulse?
  • How often do you impulse shop?
  • How important are name brands to you?
  • Do you borrow money from others?
  • How do you feel about debt?

Sources: realsimple.com; fidelity.com; aarp.com; cnbc.com



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