Personal financial planning focuses on steps to establish certain short- and long-term financial goals. Tasks like creating a personal budget, planning for taxes, and setting up investments and accounts can help individuals reach specific objectives, from paying off student loan debt to having enough to live on during retirement.
But when “me” becomes “we,” personal financial planning can become more complex. When you marry someone else, you could find yourself facing several challenges in implementing and maintaining a personal financial plan.
Debt
Debt can exert a huge influence on a marriage. “Debt” doesn’t refer to just credit card expenses, either. Student loan debt can stress a couple’s ability to successfully budget. Additionally loans taken out by one spouse during a marriage can be the other’s responsibility especially in community property states (Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin).
Furthermore, if you co-sign on debt or open a joint account, late or negative payments could impact your credit scores. You could even be sued for outstanding debt generated by your partner.
Furthermore, if one partner brings debt into a marriage, this can present a challenge to financial planning, as more needs to be set aside to pay down what is owed.
Attitudes Toward Money
Spending habits and personalities can also be a challenge to creating and executing a personal financial plan. There are five “money personality types,” which include big spenders, savers, shoppers, debtors, and investors. If you’re a saver but your spouse is a big spender, sticking to a budget could be difficult. By the same token, if you’re a shopper who seeks emotional satisfaction from spending money and your spouse wants to put aside that money for a rainy day, this could also play havoc with financial planning.
Power plays with money can also impact financial planning. If you have a paid job but your spouse does not, you might feel as though you have the right to dictate where money should go. The same holds true if your spouse has a job that pays more than yours, or if one of you comes from a family that has more money than the other. An unbalanced power/money dynamic in a marriage can make determining financial goals much more difficult.
Family Issues
The old adage of “you don’t just marry the person, you marry his/her whole family” is 100% true. It’s especially true when it comes to money management. For example, your spouse’s brother might need money to pay for rent because he was laid off. This means your finances would support him. Or your mom might like splashy, unaffordable vacations and has always looked to you for help—meaning your spouse has to chip in from their income or savings. Or when a serious family illness arises and your sister can’t pay the bills, you might be called on to step in and help. Even if spouses are willing to step up and help pay for extended family expenses (on either side), this can delay financial plan goals.
Reducing the Challenges
Some steps can help reduce challenges that marriage can place on financial planning, such as the following:
Communicate upfront about debt. This involves an honest discussion about debts that might come into a marriage, spending habits, or family issues that could impact finances.
Consider a prenup or postnup. While one partner or spouse might find such an agreement insulting, it could protect you and your financial planning efforts in the event of a money crisis or separation.
Understand your financial personality. Be upfront with your spouse about how you were raised in regard to money and spending habits and insist on the same from them. Bringing this out in the open can help you develop a more realistic financial plan.
Address potential extended family issues. Knowing ahead of time that extended family might be an added expense can help with creating a more realistic financial plan.
The takeaway here is that marriage doesn’t have to be a challenge to financial planning. Honest and open communication can help reduce potential obstacles in reaching monetary goals.
