A Guide to Marital Money Bliss
The average cost of a wedding ranges from $25,000 to $35,000, plus another $5,000 for the honeymoon. Yet in the excitement of planning it all, it's easy for women to lose sight of an even bigger money challenge: maintaining their independence–"thinking single"–while facing a lifetime of financial togetherness.
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You may have said "for better or for worse" in your marriage vows. For better, a successful marriage can mean the two of you working-and saving–toward common goals. For worse, your union could end in divorce or the death of your spouse. So it's critical for women to go in with their eyes wide open. Unfortunately, sometimes they're focused on the wrong thing. "A lot of women are more likely to know their fiance's neck size and zodiac sign than his credit score," says Julie Springer, of TransUnion, the credit bureau.
That single piece of information can speak volumes about your future spouse's money-management skills. And while you're at it, you might also have a heart-to-heart about your financial goals. You may be surprised to find that your partner wants to travel while you want to buy a house, or that you want to travel while he has his eye on a new sports car. Better to know up front so you can make some compromises (see Financially Happy Ever After).
Don't shy away from addressing nitty-gritty details for fear of making the marriage seem more like a business relationship than a love match. For example, when you marry, you should maintain credit in your own name (presuming you have a good credit history). "Credit scores are associated with your Social Security number, so those scores are never commingled," says Springer. "Yours is yours and mine is mine."
Credit expert John Ulzheimer goes a step further. "There's no reason to acquire any kind of joint debt unless you need two incomes to qualify–for a mortgage, for example," he says. And because your credit score is tied to your Social Security number, changing your name is a personal preference that doesn't affect your score.
In addition to your credit, any assets you bring to the marriage that you intend to keep as your separate property should remain in your own name and should not be "commingled" with marital assets, says Alyssa Rower, a matrimonial lawyer in New York City. That could mean a business, an inheritance or even a significant savings account. Although prenuptial agreements are more common in second marriages or among older couples, Rower often draws up prenups for first marriages among people in their late twenties or early thirties. "It's an uncertain world," she says. "What if this doesn't work out?"
A safety net. Make sure your spouse's insurance policies, IRAs and other retirement accounts list you as the primary beneficiary–not your spouse's ex-wife or children from a former marriage (unless you've agreed to such an arrangement).
If you both have access to retirement accounts, Dawn Doebler, senior wealth adviser with The Colony Group in Bethesda, Md., suggests that one of you fund your account with pretax contributions and the other with after-tax contributions to a Roth IRA or Roth 401(k). "That gives you a portfolio of assets that can be used effectively in retirement based on your tax status," says Doebler.
It's normal to delegate certain responsibilities to each spouse, but stay on top of things. Judy Rubin, a partner with Plaza Advisory Group, in St. Louis, says that in her experience it's still common for women to manage day-to-day finances while men make investment decisions. But women have savvy instincts as investors–they tend to do their homework and stick with their decisions–so speak up.
Men and women each have strengths that complement each other, and they make a winning team. The best financial outcome is that you maximize your resources to enjoy a comfortable retirement–together.