Six Financial Issues To Discuss Before Getting Married (From Forbes) [5 Articles]
~ Friday, April 7, 2023 Blog Post ~
By Catherine Schnaubelt, January 17, 2019
Former Contributor; I write about retirement and wealth transfer planning.
The decision to get married can be one of the most exciting and important decisions you’ll make during your lifetime. However, in practical terms, marriage often represents the merging of assets — and as such, has numerous financial implications.
With many adults waiting longer to get married, it’s common for people to have distinct financial goals and challenges before finding a partner. Fortunately, if each partner has a voice and a better understanding of each other’s financial circumstances from day one, many issues can be addressed before they become relationship problems.
If you’re considering marriage, it’s important to discuss where you and your partner stand on the following financial issues before making it official.
- Your Partner’s Money Habits
Everyone has quirks and idiosyncrasies that help define them. The same is true when it comes to saving and spending money. You likely have an idea of your partner’s money habits given their lifestyle, but their attitude towards money likely has larger underpinnings going back to their childhood and their parents’ financial habits. It’s important to understand what your partner splurges on impulsively, their attitude towards saving and investing, and what financial fears they may be trying to hide. Once you have a complete understanding of each other’s money values and habits you can better establish common financial goals.
2. Your Individual and Joint Goals
When discussing finances with your partner, it can be helpful to begin with the end in mind. In other words, before you start combining assets and financial futures, it’s important to mutually decide where you want your financial journey to take you. For example, do you want to own a home together someday, do you want to travel extensively, do you have specific retirement goals? Depending on the answers to these and other questions, you can decide how to merge assets or whether it makes more sense to keep certain accounts separate to achieve your individual goals.
3. Tax Implications
Marriage can result in higher taxes, especially when both partners are high earners, as your combined incomes can push you into a higher tax bracket. On the other hand, it’s possible for marriage to result in lower taxes because you can combine deductions and other tax advantages. If you and your partner are not tax experts, it can be helpful to discuss the tax implications of filing as a couple versus filing separately with a tax advisor or CPA to avoid overpaying come tax season.
4. Your Debts
While debt can be an uncomfortable subject to discuss, both partners should be honest about what debts they have before combining finances — and, more importantly, what habits led to that debt. For example, thousands of dollars in credit card debt may be more concerning than thousands of dollars in student loan debt. Understanding each other’s debt stories, credit scores, and credit history are important factors to consider before making future purchases together.
5. Property
In addition to understanding your partner’s debts, it’s important to identify the assets you both have acquired prior to your relationship — as well as any assets you have purchased together over the course of your relationship — and what your expectations for those assets are in the event of a split. In certain scenarios, a prenuptial agreement (or “no-nup” if you’re not yet married) can help clearly define how assets will be divided if you eventually decide to part ways.
6. Combining Assets
Once you and your partner have thoroughly discussed your financial history and habits with each other, you can come up with a plan for how you may want to combine finances. Remember — it’s not necessary to instantly merge your assets once you’re married. Instead, it’s often best to be methodical in your approach, discussing each step carefully along the way. You can start small by opening a joint checking account, which can be a good introduction to learning how to manage your money together. From there, you can build out a budget and start saving together for joint goals.
Bringing your partner into your financial life is exciting, but it should be done with honesty, trust and awareness. There is no single correct approach to handling your joint finances once you’re married — every couple is different. The key is keeping an open line of communication as your financial circumstances and goals evolve. It may also be helpful to work with outside advisors that can help you make informed decisions and navigate your financial future as a couple.
I am a managing director and senior wealth strategist in the Houston office of CIBC Private Wealth Management with over 35 years of industry experience. In this role I am responsible for the development of integrated wealth management solutions and provide comprehensive estate and financial planning services to high net worth clients. With a J.D. and CPA, I am a frequent author of professional papers on the topic of retirement planning. Speaking and educating is also a passion of mine, having appeared at over 100 client events and professional organizations.
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Article #2: Financial Checklist Before Getting Married (From Forbes)
By Jenna Goudreau, November 3, 2011
Forbes Staff; I write about business and women’s leadership.
“Finances have long been a trouble area in marriage,” says Julie Murphy Casserly, author of The Emotion Behind Money, “and the current economic crisis is stretching even more people to the emotional breaking point.”
In fact, in a pioneering survey conducted last year, one in three respondents admitted to lying to their spouses about money, leading to arguments, distrust, separation and divorce. Experts agree that preventative action can save marriages. Before you walk down the aisle, take the time to understand your partner’s financial upbringing and philosophy, get up to speed on their past and present holdings, and lay the foundation for a transparent, co-managed financial future.
Together with your partner, complete the following financial checklist before you say “I do.”
Discuss childhood influences.
“You have to understand your partner’s money triggers, which goes back to childhood,” says Linda Descano, the chief executive and president of Citi’s Women & Co. In order to understand your partner’s money outlook — and your financial compatibility — you first need to understand how it was formed. Talk about parents’ saving, spending and communication habits and how they may have shaped your behavior. It’s equally important to discuss your emotional connection to money, says Descano. Does it offer you a sense of self worth? Are you crippled by financial fears? Put it all on the table.
Learn your partner’s financial past and present.
“The first time I married we didn’t talk honestly and consistently, and it was a messy divorce,” says Descano. “This time, when he proposed he had a W2 and a net worth statement.” She learned her lesson. Whatever you or your partner’s skeletons may be, it’s better to know. Descano advises reviewing all major debts like education, business or home loans and significant credit card balances. Pull up credit scores from a site like annualcreditreport.com, and ask if they’ve filed for bankruptcy. Otherwise, you’ll likely be caught off guard when you attempt to complete a large purchase together.
Decide on joint or separate accounts.
One of the biggest and most practical questions new couples face is whether to separate or combine finances. Decide whether joint or separate accounts or combination or the two will best suit your needs. “Many couples find that if the husband and wife both work, it can make a lot of sense to keep separate budgets so that each has their own ‘buckets’ of discretionary income,” says Robert Stammers, director of Investor Education at CFA Institute. Dual-earners may keep a joint account for household spending or shared savings goals. If all accounts are joined, Stammers says it’s especially important that they get and remain on the same financial page.
Outline income and spending patterns.
Do you work off a budget? Are you an impulse spender or a penny pincher? Is your income subject to fluctuation, and do you expect to receive any bonuses? These are all important questions to ask in order to plan out how you will tackle day-to-day finances as a married couple. Also, when one partner earns significantly more than the other, says Descano, consider contributing based on a percentage of earnings rather than in equal amounts.
Divvy up financial roles.
Just like deciding who will take out the trash and who will do the dishes, couples must decide on each other’s financial roles. Will one person be in charge of the routine tasks — bill-paying, keeping up with accounts, statement filing — and the other leading longer term investments? Will you do some of each, or everything together? Depending on the complexity of your assets or goals and the variance in your investment styles, you should also consider seeing a financial advisor.
Be certain your assets are protected.
Prenuptial agreements may not be romantic, but they could save your financial future. Prenups are generally useful when one or both partners have substantial premarital assets, an expected inheritance, family wealth or a business. “This is important to discuss prior to marriage because it is a touchy subject,” notes Murphy Casserly, “and when better to discuss than when you still like each other?”
Set joint financial goals.
“In a partnership, deciding on and planning for financial goals should be done together,” advises Stammers. Do you hope to own or upgrade your home and in what timeframe? Do you want to set money aside to travel? Would you like to save enough to retire early? Not only will you discover what’s deeply important to your partner, but you’ll give yourself ample time to plan ahead. Consider that a monthly contribution of just $100 each to a savings account — before interest — will reach $24,000 in 10 years.
Consider the tax implications.
Descano suggests speaking with an accountant to understand the implications of marriage on your taxes, which will depend on how you decide to combine your finances, the influx of assets your partner brings and how you decide to file.
Safeguard your future.
“If you have people who depend on you financially, or if you have assets in common, you need a will,” says Stammers. In order to be prepared for the worst-case scenario, you may want to visit an attorney. In addition to safe-guarding loved ones and property, consider also who you’d like to make medical decisions for you, and prepare for financial blows by starting an emergency fund and researching life insurance.
Be clear about family and career plans.
“If you have family obligations or specific career plans, there are costs and timelines that need to be discussed,” says Descano. Crucial questions to ask: If and when you have children, will you be a dual- or single-earner family? Do you expect to have an older parent living with you? In terms of career, do you expect to go back to school, need flexibility to relocate or plan on starting a business? These may change your financial goals or organizing systems, but you’ll have a better idea of where you’re headed — together.
Follow me @Jenna_Goudreau.
Readers: Did I leave anything out? What do you wish you’d talked about before tying the knot?
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https://www.forbes.com/sites/jennagoudreau/2011/11/03/financial-checklist-before-getting-married/
Article #3: Financial checklist before getting married (applicable also to those already married) [From The Philippine Star]
By Rose Fres Fausto, April 6, 2022
Checklists are our hacks to make sure we cover all important items in performing tasks, whether they’re small regular ones or big projects.
Marriage is one huge life project. The late taipan John Gokongwei Jr. was quoted as saying, “The most important decision you’re going to make in your life is whom you will marry.” And to make your marriage really work, one of the important aspects but not always discussed is your shared money values with your spouse.
Today’s article talks about ten items that should be in your financial checklist before you say “I do.” These items are still applicable to already married couples, in case you didn’t discuss this well enough because you were caught up the in the thousand and one items in your wedding checklist.
1. Discuss your CMM (Childhood Money Memories). Why? Because our money triggers are usually deep-seated in our childhood experiences about money. When you understand each other’s CMM and the effect these had in your current relationship with money, your differences in money values and behavior can be addressed more healthily, avoiding contempt in the future when money challenges arise. (Examples: 1. One who is so irritated by the spouse’s rich relative; it turns out he grew up with cruel rich relatives. 2. One does not want to talk about money; it’s because she grew up seeing his parents fight about money.)
In FQ Book 1, there is an exercise on CMM with guide questions that will help you go back to your childhood and allow you to unearth some experiences that have become your money triggers right now. This is the first step to having a healthy relationship with money.
2. Take the FQ test. It is very important to know where each partner is at when it comes to knowledge and behavior about money. There are three ways to take the FQ test now: a) online test and the good news is it now comes in English and Tagalog; b. old school style printed test by using FQ Book 1; c) video.
3. Set your goals, individually and as a couple. The goal-setting activity will serve you well when you go into the details of your money management as a couple. It is because money is your important tool in achieving your goals and dreams. Share your individual goals then try to come up with one that will be the start of your Family Goal Setting. When do you plan to have kids? Buy a house? Travel? What kind of lifestyle? I have created various contents about this: 1, 2, 3. If you want to have a copy of the FQ Mom Goal Setting Template, you can send email to FQTeam@FQMom.com with subject: Goal Setting Template, and we would be happy to send you the excel file. Feel free to tweak it to suit your own tastes and needs.
4. Prepare simple individual Balance Sheets and Income Statements. After you set your goals, prepare this important financial statement that will show your starting point. It is impossible to reach your goals if your starting point is not clear. Make this a fun activity that is sensitive to your own issues about money. It is so much better to know the debts, resources, income sources, expenses of each other now than be surprised later on after signing the marriage contract that legally binds you to each other.
5. Pre-nup or not? This is still a taboo topic for most Filipino families to talk about. It is probably the most unromantic thing to talk about when one is getting married. But hey, a great marriage cannot survive only on romance. It has to take in everything — both the lovable and unlovable parts, the beautiful and the ugly aspects of life. After seeing each other’s assets and liabilities in your respective Balance Sheets, you are now better equipped to decide whether your marriage will be more successful under the standard provisions for property ownership in our constitution — i.e. Absolute Community of Property, or execute your own terms and conditions under a Pre-Nuptial Agreement. But this is best made as a mindful decision of the couple instead of just something imposed by other parties.
6. Supporting anyone? This can be the unwritten part of the Balance Sheet and Income Statement. Is anyone supporting anyone? Your parents? Siblings? A cause? It is best to discuss this and decide what changes, if any, will happen once you say “I do.” Remember, for you to function well as a single unit of society (yes, that’s the definition of family in our constitution), you will have to be clear on financial commitments because you will now be having your own set of financial needs as a family.
7. Tax issues. You may also include figuring out if you are better off filing your income taxes separately or together as a couple. This is a very timely topic right now because it is tax season.
8. Joint accounts, separate accounts or combination. Figure out how you want to handle cashflows moving forward as a family. Would you like to have separate accounts? Joint accounts? Or combination? A combination might be the best option. No matter what your choice will be, it is still better to know about the existence of all the accounts, even if you don’t handle them. This ensures that if one goes away, the surviving spouse is not left clueless of the accounts left behind.
9. Who’s going to do what? Decide who will take care of monthly budgeting, saving, investing, and other matters related to money. Assign it according to the partners’ expertise and fondness. Since money may bring stressful events once you’re married, it is best to assign the different functions of money management to the suitable partners. But this is best shared and never allow just one person to know everything while the other person is totally clueless. Again, this is prone to a disastrous outcome not just in the event of death of the partner solely in charge of the money, but also in the day-to-day handling of family money. Isn’t it so much easier to achieve your financial goals if both of you know where you are?
9. Have a clear budget for your wedding and honeymoon, then respect it. Comparing our first wedding in 1989 and our silver wedding in 2014, I saw that so many things to spend for have been invented that can really put big financial pressure for the couple. No wonder, many are delaying their weddings these days. I know all these wedding gimmicks labeled as “must haves” are so exciting to have, but always remember that this is just one day, no matter how important it is. Don’t go overboard and regret it after. Here’s a tip I give young couples planning their wedding, “Spend for your wedding within your means; hopefully, by then, you can still have other weddings in the future; hopefully, by then you’d have more money to spend.”
I hope this financial checklist before getting married helps you have a High FQ Family.
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Article #4: When wife earns more than her husband (Kung mas malaki ang kita ni misis kaysa kay mister) [From The Philippine Star]
By Rose Fres Fausto, March 29, 2023
If you ask a couple this question, “Are you okay if the wife earns more than the husband?” chances are they would answer, “Yes!”
Times are changing and gone are the days when the wife’s role was only to take care of the house and children, while the husband brought home the bacon.
However, this is not what the 2018 paper from US Census Bureau reveals. Based on the study, when the wife earns more than the husband, respondents are more likely to under-report the wife’s earnings and over-report the husband’s earnings.
This interesting study compared what the husbands and wives reported as their earnings and with their “true” earnings based on administrative tax records.
Why so? Because believe it or not, we are still affected by the social norm that it is the husband’s duty to earn a living for the family. In double income families, the husband is still expected to have a higher contribution to the family income; otherwise, there is a “violation” of the social norm and they try to narrow the gap in their responses. They inflate the husband’s income and deflate the wife’s income. Check this out. Wives reported earning 1.5% less than they actually did, while husbands reported earning 2.9% higher than what they actually did. That is why the study is aptly entitled “Manning Up and Womaning Down”.
In another study conducted by economists at the University of Chicago using census data from 1970 to 2000, it was found out that marriages in which the wives earned more were more likely to end in divorce. Moreover, wives who out-earned their husbands were more likely to seek jobs beneath their potential, again in order to narrow down the gap (consciously or subconsciously) to comply with the social norm.
What’s interesting to note is that even if the wives earned more, they still did more of the housework and child care.
To know more about these studies, you may download them by clicking the links provided below.
The repercussions of violating the social norm
It may be safe to assume that the household is more peaceful if this social norm, where the husband earns more than the wife, is not violated. We have seen a lot of movies and have heard true-to-life stories of husbands being threatened by the wife’s earning capacity that they would resort to all sorts of shenanigans. I will not give a sweeping statement that it’s just the husbands fault of being insecure then resorting to womanizing, etc., nor will I blame the high-income earning wives for emasculating their husbands. It’s more complicated than that. It’s the human wiring that wants to abide by the rules and norms. There is pressure from family and society who all have opinions about the set up.
The good news is that there are a number of highly functioning families where the husband and wife are able to embrace the nontraditional set-up. We have in fact, coined the term house husband. If I may say, all these husbands must be really secure of themselves and know that their masculinity is not equated to their income contribution and their role is so much more than just bringing home the bacon.
Nonetheless, we cannot deny the fact that sometimes, this nontraditional set-up still puts a strain in relationships.
In another study on the relationship of spouses’ relative income to infidelity published by the American Sociological Review (see link below), they found out that when husbands earn less than their wives, they are more likely to cheat, probably to compensate for feeling emasculated. And yet, the same study shows a positive correlation between the husband’s income to his infidelity! The more they earn, the less satisfied they become with their wives’ physical appearance.
On the other hand, breadwinning wives are less likely to cheat, remaining faithful in order to neutralize their gender deviance and keep potentially strained relationships intact.
Interestingly, the least likely to cheat couples are those who earn more or less the same amount of money.
What now?
Simplistically looking at the above studies might put the husbands in bad light, characterizing them as male chauvinists and depicting the wives as the martyrs. It may also give us the wrong impression that husband and wife need to be earning almost the same income for their marriage to survive.
I don’t think so. What I’d like to propose is that husband and wife, or even before they become so, should really sit down and talk about money seriously. Yes, love and commitment are the essential ingredients of a lasting and successful marriage. But money is the necessary fuel that will make you survive, fulfill your dreams and thrive as a married couple. Because of this, it is imperative that spouses are on the same page when it comes to money. Discuss your money values, set financial and other goals together. When you are united on the money front, it wouldn’t matter anymore who earns more, because both incomes are for the benefit of your family, the basic unit of our society. Understand what money law governs your marriage. Is it the Conjugal Partnership of Gains or the Absolute Community of Property? (To know more about this, read “One heart, one soul, one balance sheet”)
For the meantime, accept that there are social norms about income contributions and they may affect you knowingly or unknowingly. And the best defense against strained marriage due to income issues is really to talk about money openly and healthily as husband and wife. Have your FQ journey together and living happily ever after will be a bit easier. For starters, take the FQ Test together now by clicking this link — FQ test.
Do tell me who scores higher! Cheers to High FQ, no matter who brings home the bigger the bacon.
Studies cited in the article can be downloaded from the following links:
1. US Census Bureau study Manning Up and Womaning Down.
https://www.nytimes.com/2018/07/17/upshot/when-wives-earn-more-than-husbands-neither-like-to-admit-it.html
2. Study by the University of Chicago
https://www.nber.org/papers/w19023
3. Study published by American Sociological Review
https://www.researchgate.net/publication/277978215_Her_Support_His_Support_Money_Masculinity_and_Marital_Infidelity
This article is also published in FQMom.com
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Article #5: 8 money challenges for women (Attention: men/women/family/employers/society) [From The Philippine Star]
By Rose Fres Fausto, March 8, 2023
Happy Women’s Month (March) and Women’s Day (March 8, 2023)!
What does it take for a woman to have a high FQ? What does it take for her to be good with money and live a financially happy life? Although there shouldn’t be much of a difference between the genders when preparing for a financially healthy life, a closer look at specific money situations point to some disadvantages resulting in money challenges for women.
Think of your friend who is clueless about money matters because she’s used to being taken care of by her husband who just passed away, or your officemate who refuses to face her looming bankruptcy due to huge credit card debts, or your old maid aunt who never worked a day in her life and expects her relatives to take care of her financial needs the way your lolo and lola did, or your teacher in grade school who is now in Hong Kong as a domestic helper sending all her earnings to her children and husband who can’t seem to keep a job, or your favorite tita who still insists on staying in her big house even if she can’t afford to pay for its maintenance anymore.
And I’m talking of smart, competent, and in most cases, even accomplished women who look confident, capable, and fine on the outside but are worried sick about money matters on the inside. There are a lot of them in our midst that we don’t know about, simply because women are good at hiding problems. In fact, some have mastered the skill that they’ve concealed these problems even from themselves, knowingly or unknowingly. You see, they will take care of other people’s problems first, before their own.
Money challenges of women
1. Gender pay gap. Women are paid less than men for similar jobs held. This originates from the roles society assigned to the genders back in the day — the man works outside the home to earn money, while the woman works at home taking care of the household, with no remuneration attached to it. Moreover, education was not available to women before; hence, the first jobs given to them were those not requiring high skills and with lower pay. This was carried on into the modern world such that even if men and women now occupy the same jobs, the gender pay gap persists. Another reason could really be employer preference, higher pay given to males because they will not take maternity and similar leaves. In the US, where 2022 data is available, the gender pay gap is 82 cents to a dollar in favor of men based on Pew Research Center. Note that in 2002, it was 80 cents, showing that it took two decades to improve the inequality by a measly two cents! With this rate of improvement, it will take us 180 more years to close the gap! This is terrible. In the Philippines, a study by Philippine Institute for Development Studies (PIDS) in 2022 shows that women earn 18.4% less than men in digital jobs, indicating a similar disparity to that of the US data.
2. Work interruptions. Because nature designed women to carry the child in pregnancy, and they are generally better-wired to do child-rearing, they take off from work to do this important task for society. On top of the maternity leave (which is now 105 days in the Philippines with an option to extend an additional 30 days without pay, and an additional 15 days for solo mothers), who is the default parent to take a leave when the child needs someone to bring him to the hospital or attend parent-teacher conferences and other activities? It’s the mom! Because of this, most women leave their jobs, put a hold on their career, usually resulting in a disadvantage in terms of earning capacity. Moreover, because of the maternity leave for women, they are often less preferred by employers.
3. Caring for elders. On top of taking care of their own children, women are somewhat expected to take care of their elderly parents, as compared to their male siblings. Again, this may lead to work interruptions and also additional financial burden for the women, especially in families where money is not openly talked about. Since they’re the ones expected to take care of their elderly parents, they may also end up shouldering the related costs if they are not able to discuss the matter openly with other siblings.
4. The challenge of earning more than their husbands. If a man earns way more than his wife, everything and everyone is cool about it, but if it’s the other way around, it may be a source of struggle. Spouses of such women are prone to being unfairly ridiculed as Andres (Under-the-saya) or hen-pecked husbands. Nobody wants this — not the husband, not even the wife, that I suspect, sometimes, some wives are willing to decelerate their career movement just so the husband can catch up! Moreover, in households where the wife is earning more than the husband, she is still the one expected to do the household management that could add stress to her job, something that her male counterpart will never have to worry about.
5. Women live longer than men. In the Philippines the life expectancy of males is 70.2 years while that of females is 74 years, according to World Data. That’s almost four years longer! As women may rejoice about having longer lives, they also have to be concerned that they have to prepare a larger retirement nest egg compared to their male counterparts, from their lower salaries and shorter work periods, a real challenge. Wow! Let’s say that again, “Women have to prepare a larger retirement nest egg, from their lower salaries earned during their shorter work periods!” What a huge challenge!
6. Women are usually left to take care of the children when the marriage ends. In a country where there are no clear-cut policies for child support that are easily implemented, we usually see mothers fending for their children with little or no help from the male parents. Oftentimes, I hear single mothers lament, “I don’t want to have anything to do with him anymore, so I will just take care of my children’s needs!”
7. Women are not confident about investing. Women are good with budgeting. They also have the propensity to save more in terms of percentage to their income. But when it comes to investing, they shy away from it, lacking confidence in actively getting involved in this essential element of FQ.
8. Women are nurturers such that they look after the needs of others first before their own. This altruistic trait is good to society in general but when left unchecked, may bring about trouble to the female population.
These are just some of the money challenges women face that society should openly talk about in order to address the unfavorable situations they are in. Women are the bedrock of our society and it is crucial that they should are empowered in all aspects of life, including their financial well-being. When you empower women, you empower the whole society.
Cheers to High FQ for women all over the world!
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