Newlyweds and couples moving toward marriage, take note. Love is not all you need. Not if your goal is to avoid the top reason marriages end in divorce: money problems. To get the conversation rolling, here are seven steps to steer clear of potential financial trouble:
■ Disclose financial records. Before corporations merge, both sides get a close look at each other’s financial. Take the same approach. Swap statements for your bank accounts, credit cards, student loans, retirement accounts, and so on. Also share credit reports and FICO scores.
■ Discuss financial goals. A huge part of getting in sync with your spouse begins with discussing major life goals and the necessary financial commitments.
Discuss short-term goals, such as paying off credit card debt, and then craft a budget that sets you clearly on a path toward your goals.
■ Budget your spending. Failing to stick to a mutually agreed upon budget can lead to marital strife. It doesn’t have to be complicated. Start off by listing monthly income. Be sure to add in interest earned on money-market accounts and dividends from any investments. Then add up expenses, including car payments, rent, groceries, gym memberships, and utilities.
If you make more than you spend, begin planning how to set aside money for long-term needss. If not, consider ways to cut spending.
■ Treat your money as our money. Many newlyweds continue to see the money they earn individually as their own, as if they might be roommates. They keep separate accounts and pitch in, equally or not, to paying bills. But that can lead to problems, especially if one spouse earns a lot more than the other, says Anthony Chambers, a clinical psychologist at Northwestern University.
If both spouses work, he suggests they arrange for their paychecks to be deposited directly into a joint account used to pay all shared expenses. If they feel they need to their own play money in a separate account, that’s fine. But the funds should come from the joint account so both know where the money goes.
■ Keep credit cards separate. It’s not necessary to make your spouse a joint accountholder on your credit cards, especially if he or she has a poor credit history. Instead, make your spouse an authorized user of your credit cards. This will avoid any impact on your credit rating.
■ Don’t split costs 50-50. In marriage as in most other scenarios, money is power. Splitting household costs down the middle can breed resentment when one spouse makes a lot more money than the other.