Online Survey’s Findings on Money & Marriage

A recent online survey commissioned by the National Endowment for Financial Education® (NEFE®) and conducted by Harris Interactive in May 2011, finds while 86 percent of those who either got married in the past five years or plan to get married in the next 12 months say they plan on talking about money and their financial situations prior to the wedding, many couples do not know how to start the conversation with their partner, nor completely understand how to effectively merge their finances.

“It’s not unusual for two people in a relationship to have very different styles of money management,” says Patricia Seaman, senior director with NEFE.  “The key is discovering differences early and reconciling them to maintain a positive financial future and a healthy relationship.”

Seaman suggests couples talk about how they will divide routine household expenses, decide how they will set aside a little bit of discretionary spending money for each other, and review and understand each other’s credit history and credit score.  According to the NEFE survey, 43 percent of respondents say they did not know the credit score of their fiancé before marriage.  And when couples are unsure how to combine finances and do not effectively communicate about money, financial infidelity can occur.  Another recent NEFE poll, performed online by Harris Interactive in December 2010, found that three in 10 Americans who have combined their finances with a partner admit to lying to their significant other about their finances.

“Financial infidelity is a common problem,” says Seaman. “It can be anything from hiding cash or purchases to keeping a secret bank account.  Some of the warning signs could be your partner feels very defensive when it comes to talking about money or someone insists on handling all the bills and the financial transactions alone.”

To help couples get on equal footing regarding their finances before and after marriage, NEFE offers the following suggestions:

• There is no one “right” way for married couples to handle their finances. Factors to consider include convenience, personal “spending money” for each partner, and comparing the benefits of each other’s accounts.
• Decide how to divide household expenses.  If the incomes of two working spouses are fairly equal, bills might be split 50/50. If there is a substantial difference in earnings, bills can be pro-rated.  For example, the spouse that earns 70 percent of household income can pay 70 percent of the expenses.
• Review each other’s credit reports prior to marriage.  If a spouse-to-be has a poor credit history, don’t apply for a joint loan (such as a mortgage) or credit cards.  Keep your credit histories separate until negative information drops off the credit report with the poor record, usually in seven years (10 years for bankruptcy).
• If you add your name to a spouse’s credit accounts or co-sign a loan, you become legally responsible.  Similarly, if financial accounts are merged, the assets of the spouse with the good credit history can be seized by creditors.
• Older couples with substantial assets or children from a previous marriage may want to consider a prenuptial agreement to make decisions in advance about financial matters in the event of death or divorce.

 

Every couple entering into marraige has a different set of circumstances surrounding their relationship.  Please consider these findings and see how they apply to your relationship. 

– Phillip