Advisors offer congratulations when they learn a client plans to get married. But they don't stop there. They offer financial tips to help them start off right.
Awash in marital bliss, couples may not treat money matters as a priority. That's where advisors can add value.
Key Financial Tip: Level With Each Other
Establishing a harmonious financial relationship with a new spouse takes effort. Couples need to level with each other about their saving, spending and investing habits.
"I encourage engaged couples to fully disclose their income, expenses, assets and liabilities," said Amy Jo Lauber, a certified financial planner in West Seneca, N.Y. "It's also important that they talk about their money history: what they believe to be true about money and how it should used. That's the source of most money arguments."
To facilitate these conversations, one financial tip Lauber gives couples is a homework assignment. She asks them to list their top three values, prioritize them and share their answers with each other.
"That helps them define what they want to do with their money and the best use of their money," she said. For example, one of them may identify faith, family and personal growth. The other may choose justice, independence and family. With assistance, they can talk through their differing priorities and devise a plan that's mutually agreeable.
Couples who welcome the chance to strengthen their bond are more apt to derive more benefit from this exercise. If they dread such talks, however, they tend to withhold information or adopt a dismissive tone.
"Money is like the last taboo," said Sarah Carlson, a certified financial planner in Spokane, Wash. "So I encourage couples to schedule regular dates and make them romantic, like at a fancy restaurant, to discuss their money goals."
Resolve Practical Concerns Before Conflict Erupts
Engaged couples who confide in each other about money get a head start in avoiding conflict later. It's even better if they strategize together to implement sound solutions.
For example, younger newlyweds often come into the marriage with debt from student loans, credit cards or other sources. Sharing the details of the debt helps build trust.
"Couples reach their money goals much faster when they verbalize the goals and write them down," Carlson said. "If someone comes to the relationship with debt, they need to talk about it together and agree on a strategy" to address it.
She adds that couples often benefit from some measure of autonomy over their personal spending. She recommends that they allocate a preset amount of "mad money" that they each control without getting permission from their spouse to spend it.
Other practical issues arise when advisors counsel the betrothed. Depending on their age, assets and background, couples may need to hash out how they'll manage any future inheritance. Also, whether they need a prenuptial agreement and when to share credit reports.
"One thing they'll want to go over is will either of them change their name," said Kelly Graves, a certified financial planner in Charlotte, N.C. "It's painstaking to do that and it's a lot of work."
Share Credit Reports Now, Not Later
If one or both of them expect to receive an inheritance at some point, their advisor may start a discussion on how they'll use that money. State law varies on whether inherited money is separate property. So advisors may walk clients through different scenarios, especially if there are children from a previous marriage.
When one or both spouses enter into the marriage with significant assets, they may consider a prenuptial agreement. Graves says the issue is more likely to come up with people in their 50s and older, particularly if it's their second or third marriage.
"I'll say that each of them should consult their own attorney about that," he said. "If they have separate assets, I also advise them not to change beneficiaries on wills and trusts right away. It may be best to leave the beneficiaries as is."
Otherwise, he warns, newlyweds can get caught up in the emotion of the moment and make rash decisions about changing beneficiaries that they regret later.
Younger couples may plan to go house hunting. Another financial tip is to share credit reports beforehand so that when they apply for a mortgage or other loan, there are no nasty surprises, Graves says.
Perhaps the most important role an advisor can play is helping engaged couples bridge gaps in how they save and spend.
"Finance is a leading cause of divorce," Graves said. "So why not nip it in the bud?"
If he sees that a saver is marrying a spender, for instance, he will suggest that they see a counselor who can guide them to come together over money matters.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.