Terry Savage: Marriage and Money

By: Terry Savage

The spring wedding season is upon us, and around the country brides, grooms and their parents are making arrangements for extravagant celebrations now that the COVID-19 pandemic is (hopefully) behind us.

According to a survey by The Knot, there will be more weddings in the United States in 2022 than any other year since 1984. And, on average, couples will spend $28,000 on their ceremony and reception, back in line with 2019 levels.

Yet with all the money involved, it’s a safe bet that most of these couples haven’t focused on the one aspect of their marriage that has the most potential to either disrupt their happiness or contribute to their marital bliss.

A few years back I co-authored “The New Love Deal: Everything You Must Know Before Marrying, Moving In or Moving On.” It’s still available at Amazon.com. My co-authors (and good friends) are Gemma Allen, a famed divorce attorney, and Michele Lowrance, a former divorce court judge and now sought-after mediator. The advice in the book is timeless, and it makes a perfect wedding shower gift!

So in this season of wedding planning, here are a few money tips from our book:

Talk Openly About Money

We suggest starting this premarital money discussion at a quiet time, with a glass of wine — just one — to get things flowing. Start by writing down and sharing your income and your debt obligations, including student loans and credit card debt.

If that’s too much of a disclosure challenge before you commit, how can you possibly plan for a lifetime together? This discussion does not preclude keeping money separate; in fact, that’s often a good solution. But lack of basic honesty about money matters is a fatal flaw in your future.

Respect Each Other’s Money Personality

There are two basic types of money attitude: saver and spender. The source may be genetic or come from experiences as a young child. But not only can’t you change your own money attitude easily, it’s almost impossible to change your partner.

Recognize those differences and set up systems that allow each of you to function without stress. Recognize that dramatic disagreements about money style can wreak havoc on your relationship. This is the time to decide if money management is a deal-breaker.

Set Up A Money System

It’s important to set up a structure for handling money in marriage. Will you each contribute equally to a household account that is used for basic bills? If your incomes are disparate, will you each contribute the same fixed percentage of after-tax income to the household account? You can still keep separate accounts for personal spending — whether for clothing or birthday gifts to each other.

Plan Your Savings Strategy

If both are working, you should each have a retirement plan at work or an IRA to save for your own future. But will you also have joint savings in a special account to which each contributes? The money could be designated for a vacation or down payment. And how will you invest that money? Respect your partner’s risk tolerance when it comes to joint investments.

Manage Insurance Jointly

Homeowners or renters’ insurance will likely be paid out of your joint household account. But if both are working, does one have better health coverage? And if premiums are deducted from her salary, what extra should he contribute to the household expenses? Plus, if your proposed lifestyle demands two incomes, each might consider life insurance with the other as beneficiary.

Perhaps you want to make a written agreement — a prenuptial that could spell out who gets what in case this doesn’t work out, as well as any other promises, financial or otherwise, you choose to make to each other.

Or maybe just an open discussion will set you on the right path. You’re entitled to privacy if you want to splurge on an expensive purse or some sporting equipment purchased with your own money.

But if you feel you need at the outset to hide your outstanding debt or your spending compulsion or your penurious savings habits, I promise that your marriage is eventually doomed. And that’s the Savage Truth.

(Terry Savage is a registered investment adviser and the author of four best-selling books, including “The Savage Truth on Money.” Terry responds to questions on her blog at TerrySavage.com.)