Why couples should discuss money before getting married

Posted at 02/16/14 9:03 AM

MANILA, Philippines - When you get married, you vow to stay with someone for richer or for poorer. So discussing your finances openly before marriage is just as important as declaring your love.

"You should have full disclosure on all income because if you're going to start hiding, then it's not good. Because when you hide, that simply means that you have a tendency to overspend. You hide money because you probably have intentions for something. Sometimes, those intentions could not just be spending, but could be gambling," Nannette Ferreria, a financial advisor, told ANC's On The Money.

Before couples get married, they should sit down and discuss their financial situation.

One should ask their partner the following questions:

Do you have debt?
Do you have any financial obligations?
Do you have any savings or investments?
What are your financial goals?

Ferreria said she once talked to a young couple who was about to get married. The young man was surprised to find out his girlfriend saved more money than he did, and he had twice her salary.

"It turned out to be very positive for him. He would meet secretly with us and he said 'I want to start saving up.' And he did. He set a budget for the wedding and every month that was what he gave and we would help him invest it... It became a challenge for him to 'out-save' his girlfriend," she said.

For those with financial obligations, Ferreria said one should set guidelines on how much to give and how long this will continue.

"You should have certain maximum amount as to how much. You should also have a budget for helping out people," she said.

Next, couples need to decide if they will have a joint bank account or have additional separate accounts. If both work, they should discuss how they will contribute to household expenses.

Some financial advisers suggest both parties should have a discretionary fund or "fun money."

Those with spouses who don't work, Ferreria said it's important to give your spouse a "salary", separate from the household budget.

"We also have clients who feel the other person manages the money better, so they would rather give the entire salary or income to the other person. And the other person manages the income and expenses, as well as the savings target that they have," she said.

Also discuss money goals with your spouse by creating a family budget and discuss how to pay off any debt.

It is also a good time to discuss insurance and estate planning.

Couples should also thresh out serious financial issues before marriage.

"Those are very serious issues that you must consider, whether to continue with the marriage or call the marriage off. Say you have someone who is so indebted, uses the credit cards left and right, and uses it for the wrong things, overspending all the time, then you must really think hard about whether you want to push through with it. Because you've seen a lot of marriages out there who stick it out but because of the many financial issues and concerns, they have an environment at home which is very negative, indifferent or so much anger," Ferreria said.