Five conversations to have before you get hitched
Emma-Lou Montgomery, Fidelity Personal Investing, 15 August 2019
When it comes to matters of the heart it’s actually your financial stability that will help get you your ‘happy ever after’.
So you’re getting married. Congratulations. Now it’s time to get serious for a moment. It’s time to have The Conversation.
I don’t mean the one about whether to invite the step-mother to the wedding, or how many tiers to have on the cake. I’m not even talking about kids. I’m talking about something far more important - money.
‘Til debt us do part
You might typically like to think you know your partner inside out, or you might be someone who generally prefers to keep the unknowns unknown, but this is not the time to be coy. There is something you need to tackle before you get that ring on your finger. Here are the five conversations you must have.
1. The no holds barred ‘current state’ of your finances conversation
There’s no doubt that there are definite financial advantages to getting married and pooling your finances. Joint incomes can put you in a stronger position when it comes to applying for big loans like a mortgage, enabling you to borrow more and also making you a more attractive proposition to a lender. When it comes to saving and investing you’re also better off, with two sets of tax allowances to play with.
At the same time, once you’re coupled up any good credit rating you’ve built up on your own will still stand. Because when you get married, your own individual bank accounts, credit cards and personal loans remain yours and yours alone. And the same applies for your husband’s or wife’s.
The only time your spouse’s credit history affects you is when it comes to joint accounts/applications. And this is why you have to talk. Because if you do have a joint account, or any form of credit, with a spouse, their credit history will be taken into account when you submit your application.
As unromantic as it may be, it’s a really good idea to share one another’s credit files. Then you know exactly what, if anything, could crop up when it comes to getting a joint bank account or a mortgage.
If you do track down any offending records and you can prove that you’ve mended your ways, then you might be able to have it wiped off your credit history. The first thing you need to do is get hold of a copy of your credit file from one of the UK credit agencies. Then contact any lender that holds inaccurate or out-of-date information about you and ask them to have the record set straight. Ironing out snags before they cause a problem will pave the way for a more harmonious financial future together.
2. Your own relationship with money conversation
Whether you are painstakingly careful with money or more prone to spending like there’s no tomorrow, being honest with your intended about your own relationship with money is one of the primary building blocks of a strong marriage.
Some people are spenders and some are savers, some fall into the middle ground and some are prone to veer erratically from one to the other. Whatever your own personal disposition, make sure you share it with your intended.
Don’t panic if you find you have completely different attitudes to money. It doesn’t have to sound the death knell for your long-term future. On the contrary it can actually be beneficial and bring some financial balance to your relationship, if you work together. But, in order to be able to work together you have to understand each other’s attitude to money.
For instance, if one of you is a saver and the other a spender you could keep separate bank accounts as well as having one joint account that you use for all shared expenses - like rent/mortgage, food, bills and so on. It’s a good way to prevent your money differences from driving you apart.
You can also use differences to your mutual benefit - sharing saving habits and smart spending tactics - to get the best of both worlds.
3. The time to ‘own up’ conversation
An astonishing number of people haven’t been entirely honest with their intended about the full extent of their debts and while it’s your choice, it’s also guaranteed to bring the ‘honeymoon period’ to a screeching halt when the proverbial hits the fan. Because one day, it will.
If your husband or wife is added to an account on which you have been ‘delinquent’, their credit score will be adversely affected. Similarly, if you’re added to your spouse’s account on which they have debts, you’ll become jointly liable for paying off those debts. And if your husband or wife defaults, the creditor can choose to come after you for the entire debt, even the amount your spouse was carrying before you were on the account.
If you’re the one keeping a dirty secret, it’s time to come clean. Suddenly finding out your spouse has £15,000 worth of debt on a credit card does not make for a good start to married life. Trust me, I’ve been there.
4. The earnings conversation
It’s not just what we owe that many of us keep schtum about, it’s also how much we earn.
Being cagey, secretive or even lying about what you earn does not bode well for your future together. Pretend you earn more than you do and the shortfall is soon going to become apparent. Conversely, lie about what you really earn and you sow the seeds for a relationship that’s lacking in trust from the word go.
5. The ‘hopes and dreams’ conversation
Once you’ve tackled all the conversations above and truly laid bare your most intimate financial details, then you’re on a really sound footing and ideally placed to talk about your future hopes and dreams.
Now’s the time to discuss your future financial hope and set in place realistic plans to achieve them. Knowing not only exactly where your finances are, but also where those of your partner are, means you’re in a very strong position for a bright financial - and marital - future.
The value of investments and the income from them can go down as well as up, so you may not get back what you invest. This information does not constitute investment advice and should not be used as the basis for any investment decision nor should it be treated as a recommendation for any investment. Fidelity Personal Investing does not give personal recommendations. If you are unsure about the suitability of an investment, you should speak to an authorised financial adviser.
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