When you’re getting ready to spend the rest of your life with someone, it seems that people are hesitant to ask the one they love the tough questions. You wouldn’t start a business venture with a company/person without knowing the ends and outs of their financial, ethical, and past history. So why would you enter into a lifelong union without finding out the same about the one you love. Treat your marriage like a business and eliminate some of the possible future issues by knowing what you are signing up for. In this article, we will only be discussing a few key financial/joint financial points that we have had or know others who have had issues with in the past.
What is your credit score
Not only do you need to know your credit score, but, you also need to know the credit score of the one you plan on marrying. You also need to find out if their bad credit score is from being young and dumb or if this is recent stupidity. Recent stupidity is like trying to teach an old dog a new trick. It will take some time, patience and a lot of discussions to break them out of their bad spending/financial habits. Knowing this information upfront gives you good insight into possible financial problems or highlights some of their possible spending issues.
This should be the start of a good financial discussion on how to repair credit, how much you want to save, whether or not to have a joint bank account, how you each like to pay bills, and so on and so forth. There should be no surprises once you’re married. All of your bills should be laid out so each one of you will know what amount of debt you are about to acquire and if possible pay off before getting married. Financial issues are one of the reasons for divorce, so treating your marriage like a business will possibly eliminate this future issue because you would have already done your research and set the expectation on how the two of you will handle martial finances.
The two of you need to decide about joint and personal accounts and how much goes into each, out of your paychecks. I know some people who each one of them put an agreed upon amount into the joint account to cover the bills and have a little cushion left over while most of their money stays in their personal accounts. I know some others that do the opposite and put most of their pay check into their joint account and they give themselves a personal allowance each check of $200 – $500 (or whatever they agree on for personal entertainment, eating out, etc…). Let’s say you two agree to the second example and you run out of money before being paid again. You have to accept that you messed up and that is on you. You will need to discuss with your spouse taking a “Loan” (yes I said loan because it is not your money it is now household money) out of the joint account and how you will pay it back. Either of these ways or any other is good as long as you both stick to what you agree to and have a contingency plan in place for cases of overspending or unforeseen issues that may pop up.
Treat your joint credit card like a corporate card
Now that you are married and joint credit cards and debit cards are appearing in the mail every day, there needs to be a discussion about which cards to accept and which ones to rip up. Along with this discussion needs to be a serious talk about putting a cap on how much each person can charge and what the spending limit will be before you have to consult your partner. Yes I said a cap on spending your own money! For those of us who have had corporate cards and have gone on business trips, you have a certain daily budget that you’re not allowed to go over before you get in trouble. Well guess what, in marriage there needs to be the same thing and treating your marriage like a business will help with this.
For example, if you have had a discussion and decided that each of you have a free spending limit of $500 (out of the joint account for household purchases) before having to consult your spouse and what you want to buy cost $505. Your thought should be “this is over our agreed upon spending limit, let me make a call and let my other half know what’s going on and if it is ok with them then I will get it”. But most people when faced with this will think “it’s only five dollars I’m getting it” Now you have just lost financial trust over $5. It’s not the $5 that is important it’s the trust that you will lose for not living up to the agreements that you two have made.
Now fast forward a day or two your spouse is online and sees a purchase for $505 and asks you about it and you decide to get an attitude. You flip out and come back with I will just put the five bucks back into the account out of my own money. This does not make what you did acceptable. What would have been acceptable would have been to call your significant other and say hey I’m about to buy xyz that cost $505 out of the joint account for the house, I will put the extra $5 back into the account from my own money. More than likely your spouse will say don’t worry about it just go ahead and get it. But that is because you included them in the decision making process.
I know that most people read the title and thought that treating your marriage like a business is insensitive, unromantic, and not sexy at all. But I want to ask you this; why do you follow your company’s financial policies but won’t make or follow one for the financial betterment (yes that is actually a word in the dictionary, but you all know if it wasn’t I was going to use it anyway) of you and your spouse. Treating your marriage like a business is just a way of opening the lines of communication as well as laying out a financial plan that will allow the two of you to come up with solutions to the tough questions/issues before they have a chance to rear their ugly heads.