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Having an Honest Discussion About Finances Before Marriage

It is absolutely vital for a couple to have an honest discussion about their finances before marriage. The consequences of failing to do this can put the relationship on the rocks.

The engagement ring is on the finger. The date has been set. The wedding guests have been invited. Everyone is so very happy for you.

What can possibly go wrong?

Well, how about finding out after tying the knot that your spouse is a shopaholic with huge debts racked up on her many credit cards? Or maybe he has been less than honest about how much money he really makes and about the length of the car loan on that nice BMW.

Having a conversation about finances before marriage is more important than ever, given the explosion in consumer debt and the number of credit cards people have.

Finding out what’s really behind the mask financially after the wedding can get a marriage off to a rocky start, with recovery prospects grim because of a big erosion of trust.

“The number one reason for divorce is financial,” said Jason Pereira, partner and senior financial consultant at Woodgate Financial Inc. in Toronto.

“If you’re not having that (financial) conversation before that ring is on the finger, you’re out of your mind.”

After all, marriage is supposed to be a lifetime partnership with both parties making a meaningful contribution, with everything known about the other’s finances.

It’s wishful thinking to believe that you can keep everything separate, Pereira adds.

“It’s really, really foolish when it comes to it because at the end of the day if you co-sign for anything, you’re on the hook,” he said.

“If you got divorced, keeping things separate means nothing. It has no grounds in family law when it comes to separation of assets and income support. It’s basically not going to be what you want it to be, it’s going to be what the court says it is.”

Trouble is, some people just don’t like the idea of someone else telling them what they can and cannot spend money on.

But there are ways around that.

“What I commonly recommend to people who don’t want their discretionary expenses put under a microscope by the other person (is to) have a discretionary budget and have three bank accounts. You have a joint account for everything, and then their individual accounts for your own discretionary spending and you do whatever you want with that.”

That way, nobody feels deprived.

But at least have an honest conversation about the state of your finances and your goals before marriage.

“In a major decision, don’t you want to put yourself in a position for the largest possibility of success?,” asked Pereira.

“In not doing that, you’re putting yourself behind the eight-ball; you have no idea what is going on?”

2 years ago

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