It’s no surprise that one of the biggest causes of arguments between married couples is money. In fact, a study from the Bank of Montreal found that nearly 70% of divorced couples listed fighting over finances as a key contributor to the breakdown of their marriage.
This may seem like a grim prognosis for engaged couples, but it doesn’t have to be.
Whether you’re tying the knot for the first time or remarrying after divorce or the death of your last partner, it’s important to have the “money talk” before you exchange vows. Discussing debt isn’t the most romantic premarital activity, but it’s important to disclose your financial circumstances and establish how you’ll manage money together before you say, “I do”.
To help guide your conversations, we’ve dispelled some common myths related to marriage and money.
MYTH: “All married couples have joint bank accounts”
A common misconception about getting married is that all your finances must be combined into one bank account. In reality, how you and your partner handle your finances is completely up to you. For some couples, having one bank account can make paying bills easier and more efficient. For others, having separate bank accounts and expenses allows you to maintain your own budget and spending style. To figure out what approach will work best for both your personalities and expenses, you’ll need to reflect on your finances as individuals and as a couple. If you feel like you’re struggling to figure out your budget style as a couple or an individual, check out our previous blogs on how to make a basic budget or how to budget as a couple.
MYTH: “When we get married, only one of us needs to handle the finances”
Although this works for some households, this is also an old-school myth. In fact, having one person in charge of finances can be dangerous. If health, work, or life interferes with the money manager’s ability to monitor your finances there can be disastrous consequences. Some folks don’t enjoy handling finances, and that’s okay, but it’s important to ensure all partners know where household funds are being spent, how much is coming in, and how they can access funds in case of an emergency.
MYTH: “When we get married, I won’t need a credit card because we will build credit as a couple”
Another myth that can cause serious issues for your financial wellness is that couples share a credit score, or that only one person needs to have credit in the relationship. Like debt, one’s credit is specific to them as an individual. Your partner having good credit does not mean that you also have good credit or that your creditworthiness is based on theirs. Credit use is different in every relationship, but even if you don’t typically use credit, it’s important to establish your credit history as an individual in case something happens to your partner or the relationship.
If you are nervous about using credit cards, try getting a credit card with a lower limit that you use for a specific bill. This could be a phone bill, insurance, or anything that is a consistent, set expense in your budget. You can even automate paying the bill and your credit card. That way you can ensure the card is paid off every month and build your credit at the same time.
MYTH: “When we get married our debt will be joint”
While some couples choose to join their savings and other finances after marriage, the idea that you also “marry their debt” is a complete myth. Being married or getting married in no way means that you now have joint debt with your partner. There are only three circumstances where an individual would have “joint debt” with someone:
- You obtained the debt together, meaning you both signed the documents, and the debt was listed in both of your names. Many people experience this type of joint debt when they purchase a home or vehicle.
- You have co-signed for a debt (i.e. a loan, line of credit, credit card) and the person you co-signed for ceases making payments. At this point, the creditor could pursue you as the co-signer for the full amount of the debt.
- You have signed to guarantee the debt of another person. If the person you guaranteed the debt for stops paying, you become responsible for the full amount.
There’s no gold standard for how a couple should manage their money. The important thing is to be transparent and honest with each other when it comes to your finances so you can set yourselves up for success.
While marriages can end for various reasons, debt doesn’t have to be one of them. It’s best to tackle financial issues head-on. If you or your partner are struggling with debt, that you obtained yourself or jointly, a Licensed Insolvency Trustee (LIT) can help. LITs are federally regulated debt professionals who help you negotiate better terms with your creditors to relieve your financial stress. If debt is having a major impact on your life, as an individual or couple, book your free consultation today and start your path to debt freedom.