Newlyweds and couples moving toward marriage, take note: Love, as it turns out, is not all you need.
Not if your goal is to avoid the No. 1 reason marriages end in divorce: money problems. Everyone knows, or should know, this. But love and a reluctance to take a hard look at our own financial habits, often keep us from seeing, much less confronting, potential financial troubles in a relationship.
Failing to do so can lead to serious trouble.
"Mature, responsible conversations about money are a sign of a marriage that's going to be healthy and wonderful and enduring," says Brooke Salvini, a certified financial planner based in San Louis Obispo, Calif. "If you can't talk about money when you are dating, that is a red flag right there."
To get the conversation rolling, here are seven steps experts recommend to steer clear of potential marital money troubles:
1. DISCLOSE FINANCIAL RECORDS: Before corporations merge, both sides get a close look at each other's financial records. Take the same approach before you get hitched. Swap statements for your bank accounts, credit cards, student loans, retirement accounts and so on. Also share credit reports and FICO scores.
"Not only can you start to put together a balance sheet of what the two of you own and what your debts are, you can start to discuss 'do we want to combine our checking account?'" says Salvini.
2. DISCUSS FINANCIAL GOALS: A huge part of getting in sync with your spouse begins with discussing major life goals and the necessary financial commitments. Discuss short-term goals, such as paying off credit card debt or buying a car, and longer-term goals such as buying a house, then craft a budget that sets you clearly on a path toward your goals.
3. BUDGET YOUR SPENDING: Failing to create and stick to a mutually agreed budget can lead to marital strife. It doesn't have to be complicated. Start by listing monthly income. Be sure to add in interest earned on money-market accounts and dividends from any investments. Then add up expenses, from car payments and rent to groceries, gym membership and utilities.
If you're making more than you spend each month, you can begin planning how to set aside money for an emergency fund, and for long-term financial goals. If you are spending more than you earn, it's time to consider ways to cut spending.
4. TREAT YOUR MONEY AS OUR MONEY: Many newlyweds see the money they earn individually as their own, much as if they might merely be roommates. They keep separate bank accounts and pitch in, perhaps equally, or not, to pay bills. But that can lead to problems, especially if one spouse earns a lot more than the other, says Anthony Chambers, a clinical psychologist at the Family Institute at Northwestern University.
If both spouses work, he suggests they arrange for their paychecks to be deposited directly into a joint account used to pay all shared expenses. If they feel they need to have some of their own money in a separate account, that's fine. But Chambers says that money should come from the joint account, so both spouses know where the household's money is going.
5. KEEP CREDIT CARDS SEPARATE: It's not necessary to make your spouse a joint account holder on your credit cards, especially if he or she has a poor credit history, which can drag down your own credit rating. Instead, make your spouse an authorized user of your credit cards. This will avoid any potential impact to your credit rating. Authorized users are also able to check account balances and track spending on the card.
6. DON'T SPLIT COSTS 50-50: In marriage as in most other scenarios, money is power. Although splitting household costs down the middle may work early in a relationship, it can breed resentment in a marriage when one spouse makes a lot more money than the other. It also can foster a sense that the person who pays more should have more say in financial matters.
"Very few things in marriage are exactly 50-50," says Chambers. "And that can really start to bring up all of these other issues of fairness." Even if costs aren't split down the middle, it's important that each spouse have equal say in money decisions.
7. TALK ABOUT SPENDING: Even after you've reviewed all the financial paperwork, it's even more important to find out how your spending habits match up. Often those habits are developed early and are entrenched. One person might have grown up in a family that counted every penny. Another might part far more easily with money because shopping became a hobby.
Beyond how much someone likes to spend, there are potential conflicts over what we see as a must-have. Even small differences can become wedge issues.
"The central task of marriage is the management of differences," says Chambers. "So you want to be able to know early on what those differences are."
Of course there is no one size fit all for money advice in marriages, but experts say this is a good place to start. And it may keep you in wedded bliss.