Wednesday, December 13, 2017
Business

Forricheror forpoorer

It's peak wedding season, and many weddings these days are over-the-top when it comes to how much is spent. The average U.S. wedding costs around $25,000, not including the honeymoon.

Meanwhile, the topic of how the couple will manage a lifetime of spending, saving and surviving financially is rarely discussed. A recent poll found that 68 percent of engaged couples had a negative attitude about discussing money with each other, according to the National Foundation for Credit Counseling.

What is it they fear revealing? Large student loans or a bad credit score? The truth needs to come out before tying the knot, because afterward the maxed-out credit cards or the addictive shopping habit will probably no longer be a secret. A spender married to a saver could be a doomed combination.

In fact, with money one of the major issues couples fight about and one of the main reasons for divorce, it's crucial that couples delve into the subject to avoid a disaster later.

Shelley Cabangon, a senior wealth planner at PNC Wealth Management in Palm Beach, says everyone entering a marriage should have a talk well before the wedding day about how they will handle finances.

Cabangon boils it down to these five issues:

1. "MY" versus "OUR" money: Will we have joint or separate accounts? Will we consolidate accounts with the same banking partner?

2. Debt: How much debt am I bringing to the marriage, and how will we manage it?

3. Who's in charge of budgeting and paying the bills? Is there a CFO of the house, or is it a partnership?

4. Spending: Are our spending priorities in line? Is there mutual or individual approval for spending?

5. The Future: Are we prepared to plan for retirement together? (e.g. 401(k) plans, Roth IRAs, etc.)

"It is not necessarily an easy conversation to have right off the bat," Cabangon said. "You can't be having it shortly before the wedding.

One way to solve the My versus Our money issue is to have a joint account for shared expenses, such as the mortgage or rent, electric bill, car payments and food. Individuals could also have separate accounts as well to retain some autonomy.

Don't automatically assume your future spouse feels the same way you do. One party might consider a fancy car a necessity, while the other is content with basic transportation.

Assets and liabilities need to be discussed. How much does each person have in savings?

If children from a previous marriage are involved, questions about who will pay their expenses need to be ironed out.

Attitudes matter, too, especially about retirement. Does one person plan to never retire, while the other dreams of retiring at 65 and traveling the world? What about saving for children's college costs, or vacations?

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