Before getting married, couples often talk in detail about their hopes and dreams for the future including how many kids they want and where they want to live. But one thing that many couples don't talk about enough is money. According to Shannon McLay, founder and president of The Financial Gym, that's a big mistake.
"Money is the ultimate taboo conversation," she said. "We are more comfortable getting physically naked with someone rather than financially naked."
McLay believes that it's critical to talk as early as possible about things like how much student loan debt you each owe, whether you have savings or investments, and what your credit score is like.
"It's important to get financially naked as early on in a relationship as you can," she said. "If someone sees your digits and still wants to stick around, it not only solidifies your relationship, but it also takes away any barriers for other potentially painful conversations at a later date."
Talking about money openly is just one part of the equation. Here are some tips for how to effectively deal with money if you're newlyweds.
You might love your partner's sense of humor, but their habit of overspending might cause you a significant amount of stress. Most couples don't agree on all financial matters and that's why it's important to spend time to understand your different financial philosophies.
"I think one of the most important factors in successfully managing money together is first getting an understanding of each other's money views," said Roger Ma, a Certified Financial Planner and Founder of lifelaidout. "This often is an ongoing discussion rather than a one-time assessment."
When doing this, it's important to also understand how you have each managed money in the past, why you feel how you do about money, and what money means to you. These money conversations can be difficult to have if there are significant disagreements.
"I think one of the biggest mistakes a couple can make is not being forthcoming about each of their financial situations before getting married," Ma said. "Keeping financial secrets may keep the peace in the short-term, but could ruin a marriage in the long-run."
McLay's suggests starting small and working up to bigger conversations.
"I think it's always best to test the financial waters with smaller issues first like creating a weekly/monthly budget or setting joint savings goals before delving into more hot button issues like paying down debt versus investing," said McLay.
If you're successful with those conversations, she believes you can move on to topics that are potentially more volatile. If you find that can't talk about these things without fighting, McLay suggests you have a third party mediate.
"It doesn't have to be a financial planner," she said. "It could be a friend, family member or religious leader, but the person should be a disinterested third party that you both trust."
One of the most empowering things that a couple can do is create common goals that they can feel excited about and work towards together.
"Having common financial goals is key to success for the couples I work with," said McLay. "When you both agree on what you are saving for and why, it's easier to focus on achieving those goals."
To create strong financial goals together, it's important to spend some time thinking about how you each envision your lives and then set aside time to share the ideas you've come up with.
"I suggest sitting down over a drink or in a relaxed environment and determining what your joint goals are," she said.
After that, you have to create a plan for how to accomplish those goals. That might involve working with a financial planner who can help you create a plan that is realistic and achievable, or seeking out different financial services that will enable you to hit your goals more quickly.
If you're tackling student debt, refinancing your student loans may be an excellent option for you and your partner. For example, when you refinance with CommonBond, you could save over $15,100, on average, through a lower interest rate. This will allow you to allocate more money towards long-term goals like buying a home or saving for retirement. (Looking for a good resources to help you and your partner make smart financial decisions? Download CommonBond's Guide to Managing Money.)
"Once the plan is in place," McLay said, "I suggest 'money dates' every month or so to track your progress and make adjustments as you need. The more conversations you have around money as a couple, the healthier your overall relationship will be."
"I think the biggest money challenge for a couple after getting married," said Ma, "is beginning to manage finances together."
According to Ma, he sees couples choose to combine all their accounts, others combine some accounts, and the rest decide to keep things separate.
But Ma believes that it's important that couples work together to manage money and thinks that having at least one shared account is important.
"The process of combining existing and new money together leads to other important discussions, such as determining long-term personal and financial goals," he said.
Joint accounts also streamline your finances as a couple.
"Joint accounts simplify the pots of money you have to keep track of," Ma said, "and also make for a more efficient transfer, from an estate perspective, in the case of the unfortunate passing of one partner."
As newlyweds, you likely aren't thinking about the possibility that your marriage could end, but money conflicts lead many couples to divorce. That's why it's so critical that you take financial conversations and financial planning seriously.
"I've counseled more than a few couples that were on the brink of divorce, primarily due to their money struggles," McLay said.
But if you communicate well and work proactively to handle your money conflicts effectively, you can actually strengthen your marriage.
"The couples I work with who have the most transparent financial situations are the happiest," she said. "Even if they don't agree on every financial choice, they at least feel as though they're on equal footing because they share the finances and make decisions together."