Are You and Your Mate...

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Financially Compatible

This time of year, many women are wearing engagement rings. Sadly, many of these women and their fiance's have spent more time picking out the ring than discussing their financial compatibility. With money being one of the things couples argue about most, it's wise for dating, engaged couples and people in relationships to question whether their views on money are similar enough to make the marriage of their accounts strong enough to support the marriage of their hearts, souls, and minds. Couples should ask each other several financial questions before the big day:

What is your current income?
Money is sometimes a touchy subject, so it's possible to know someone very well before you know how much that person really makes. Don't assume that someone with a prestigious job makes a high salary or vice-versa. When you talk about your income, be sure to include income from all sources, not just jobs. If one of you has parents or grandparents who help support you financially, will that support continue after the wedding?

Will any of your plans for the future significantly affect your income?
Is it your lifelong dream to work just long enough to save the money you need to support yourself while you write a novel? Do you believe that one parent should stay home with young children? If so, think about how these plans will affect your income and how you will adjust your budget when you're bringing in less money.

How much debt do you have?
Consider how much of your future income will go toward paying off debt you have already incurred. In at least one instance, a groom called off the wedding when he found out how much debt his fiance' had. While it sounds terribly unromantic, he may have made a wise choice, as high debt can place a heavy burden on a new marriage.

What do you think is worth incurring more debt?
Would you only go into debt to buy a house or a car, or are do you typically keep spending until your credit limit is reached? While you probably have a general idea which of these two extremes your loved one gravitates toward, it's wise to sit down to discuss your feelings about debt and draw up some guidelines for using credit cards or taking out loans when you are married. Talk about a few specific hypothetical circumstances. For example, would you borrow money to take advantage of a business opportunity? If you have children, would you take out loans to help them pay for college? Your answers might also teach you something about yourself as you learn about your fiancÈ.

Will you have separate checking and savings accounts?
Most couples will have joint accounts, but if your spending styles are extremely different, you may find it easier to keep separate accounts (at least for checking) and to make an agreement on who will pay what bills.

What is your spending style?
Are you basically a saver or a spender? One way to find out is to ask what you do with your tax refund (or other out-of-the ordinary lump sum if you don't get a refund). When you do spend money, do you stick to a strict budget or buy whatever catches your fancy?

What are your spending priorities?
This question is similar to the previous question but not quite the same. Both savers and spenders have priorities when they do spend. For example, do you tend to buy a lot of CD's and computer games or are you more likely to spend money on vacations and sporting events? Keep track of all your spending "cash, check, and charge" for a month or so, and take into account any annual events or vacations where your spending is out of the ordinary. Compare your list with your partner's and discuss any expenses that might cause problems.

What are your long-term financial goals?
How much do you save and what is your intent for the savings? Do you plan to retire? If so, do you want to travel around the world or just relax in your own home? Do you hope to leave your children a large inheritance or do you want to die broke? Try to agree on your goals and keep them in mind when you discuss saving habits.

How do you feel about giving to charity?
If one person carefully plans donations and the other responds to every appeal or doesn't want to give at all, you may find that even good intentions can cause dissension. Once you agree on how to give and how much to give, discuss what types of organizations you like to support and whether you will increase your giving if your income increases.

Where will the money go when you die?
If you currently have a will, does it need to change? Discuss whether you are remembering any charities or non-relatives in your estate plans. If you have children from prior relationships, agree on how your current assets and any assets you gain as a couple will be divided among your children. You may also want to meet with a lawyer or financial adviser to discuss these matters prior to the wedding date.

These questions don't cover all the financial issues you will face as a married couple, but they will prepare you for any major disagreements you might have. It's unlikely that couples will agree on all of these questions, but a general financial compatibility makes married life much easier.

by
Shannon Christman