February is a leading month for engagements, and for many couples, this is the season they begin to plan their financial future together. When you are just starting out, talking about money may not sound romantic. But couples who have spent many years together learn that their financial situation can be a source of strength and partnership, or a force that can tear them apart.
Before you embark on a new relationship — or if you are seeking to make your partnership stronger — consider these eight questions couples should ask about love and debt.
1) What is your financial status?
You might think only movie stars and heiresses sign prenuptial agreements, but everyone should take a look at their partner’s financial situation before signing on for a life together. If your partner’s financial background is clean, great! If there are some smudges — or outright black holes — you can develop a plan to tackle the problems together. It is only fair to give your future partner an honest look at what they are getting into, till death do you part.
2) Are you in debt?
What is the debt for? It’s natural for young adults to be repaying college debt, or for people to be paying a mortgage. These “healthy” debts are investments toward a better future. But if you learn that your partner owes thousands on credit cards or hasn’t paid old medical bills, be prepared to have a discussion about financial discipline. If you accidentally learn about debt your partner has not disclosed to you, a serious discussion is definitely in order. Make an agreement about how to handle debt, especially if one person owes much more than the other.
3) Do you have credit cards? What do you use them for?
Take time to understand how your partner views credit cards, and what they use them for each month. Using credit cards for everyday expenses can be OK — if your partner is very responsible, doesn’t spend beyond their means and pays off the balance every month. A better answer is that they use cash or a debit card for living expenses.
4) What is your credit score?
If you don’t know why this question matters, it’s all the more important to discuss it. When married, each spouse’s debt incurred before marriage will generally remain his or her own. But if one person has a poor credit score, it will affect the rates you pay on purchases together — such as a home. A score might be lower while a person is just starting out. But if it is low because of poor financial choices, a couple needs to discuss how those patterns will change in the future.
5) Do you have a spending plan or budget?
Ask about short-term plans (such as a monthly budget) as well as long-term plans. You will gain insight into your partner’s priorities and how much thought he or she puts into financial planning.
6) What is your history of financial stability?
Ask your partner about his or her history. Have they ever had accounts sent to collections? Have they co-signed on another person’s loan, or had a co-signer on a loan they owe? Do they owe (and pay) child support? Have they ever filed bankruptcy? Have they had a home foreclosed upon? Have they had a tax lien or other wage garnishment? This is the time for total honesty — surprises later can destroy a couple’s trust in each other.
7) How will we share financial responsibilities?
Many couples find that one person is a saver and one is a spender. Do you anticipate having joint accounts or separate accounts? Discuss who will handle most financial responsibilities — paying the bills on time, setting up budgets and monitoring spending. Also discuss how the other partner will contribute to your mutual financial well-being. If this conversation becomes contentious, that is another yellow light. Slow down and come to an understanding before you commit.
8) Will we have children? How will we care for them?
This is an important question to discuss, and often a particularly key one in premarital counseling. Raising children is expensive. Big parts of that cost are expenses for child care and college. Does one partner envision staying home to care for children? For how long? Will the other partner’s salary support the family during that time? Do you both believe in saving for children’s college, or having them fend for themselves?
Chances are good that as you discuss these topics, others will come up. Take this opportunity to open an honest dialogue about your expectations and past financial situation. If you find that you need more support to work out these issues before marriage, speak with a financial planner and/or locate a premarital counselor who specializes in financial counseling. After all, you can only build a strong future on a solid foundation of trust.