Engaged? How well do you know each other's finances?

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If you recently popped the question or breathlessly said "yes" to a marriage proposal, you probably think you know your future spouse pretty well. However, it's important to remember that marriage is more than a romantic union, it's also a financial one.
To avoid surprises or disagreements down the road, it's a good idea to fully understand each other's financial situation and attitudes before you legally come together as a couple or a blended family. Being open and honest with each other can improve your ability to work together toward your goals and help avoid some of the stress that money issues can bring into a relationship. Here are some things you should discuss before you say "I do:"

1. How will we manage our day-to-day banking needs?

Chances are that you are coming into the marriage with separate accounts to deposit your paycheck and pay your bills. It's time to discuss how this will work going forward. Will you share the responsibility or will one of you exclusively manage your day to day finances? And, what about your bank accounts? Some couples decide to keep them separate, while others merge their accounts when they get married. A third option is to have three accounts: mine, yours and ours. With this approach, you could use the joint account to pay shared bills, and maintain some financial independence through your personal accounts.

2. What are our financial goals?

It's likely that you have already talked about where you'd like to live, if and when to start a family, dream vacations you hope to take and when you might like to retire. But, if you don't think it through and establish a plan, you're likely to fall short of your goals. For example, saving for a down payment on a home may require you to forgo the exotic honeymoon you were dreaming of or you may decide to put the house off for a year or two so you can create an amazing memory. Either decision is fine as long as you agree it's what you want and how you will pay for it. If you don't discuss that ahead of time, one of you may be very disappointed. Remember that compromise is an essential skill in all aspects of marriage.

3. What about spending habits?

Are you a shopaholic or do you plan and agonize over every purchase? As painful as it can be to see the realities of your cash flow situation, a budget is critical to help you monitor your spending and savings habits. For couples, a budget can also help you identify differences in your financial personalities. When comparing your budgets, you may realize that you approach money differently. Perhaps one of you is a spender while the other saves diligently. If that's the case, work with your future spouse to create a realistic shared budget that helps you pursue your financial goals while respecting your different approaches to money.

4. What's your number?

And no, we don't mean your phone number. Having a conversation about your credit score is proof that your relationship has reached the next level. Knowing your future spouse's credit score and payment history will give you a good idea of his or her fiscal responsibility and whether it will be easier or more challenging to apply for credit once you are married. It may be that your partner is truly making the best of bad situation arising from student loans or an untimely dip in the housing or financial markets, but if you believe it's an indication of ongoing money management issues, now is the time to discuss it. Hopefully a better understanding of how these behaviors will impact your combined credit score (e.g., overspending, missing payments) will provide the incentive for a necessary change in behavior. If not, at least you know what you're dealing with and there will be fewer surprises when you apply for a mortgage or other credit.
Knowing your future spouse's credit score and payment history will give you a good idea of his or her fiscal responsibility, and whether it will be easier or more challenging to apply for credit once you are married.

5. How will we protect our financial security?

Financial security includes everything from building an emergency fund to planning for what will happen if one of you dies to ensuring that you've got enough saved for retirement. Review your health and life insurance to look for ways to save as a couple and to ensure your coverage is adequate for the two of you. Update your wills and investment accounts to ensure that your future spouse is named as your beneficiary. And, compare your retirement accounts to see if you need to change any of your investment allocations and identify if you're contributing enough to meet your retirement goals.
It's unrealistic to think that you both will have the same values about money, so don't worry if your answers are different. As with all aspects of your relationship, the important thing is to keep the lines of communication open to lay a strong financial foundation for your future together.
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