To Her Credit offers targeted advice about personal finance based on unique challenges faced by women. It is authored by women with different financial backgrounds, dedicated to encouraging empowerment through financial literacy.
It doesn’t matter who you are, letting someone into your financial life can be difficult. And combining lives is pretty much the textbook definition of getting engaged.
Even if you’ve been living together for years, the idea of having to share – or explain – your intimate relationship with money (in gory detail) is enough to make a lot of us forgo that conversation.
But it’s best not to postpone the money talk. This is the time to get everything out on the table, says Jean Chatzky, CEO and co-founder of HerMoney.com and the HerMoney podcast.
And she means that literally.
What you want to ask (and share with) your partner is: “What do you earn? What do you own? What do you owe?” It’s also in both of your best interests to discuss credit scores. These things will determine if you and your betrothed are shopping for a cute place of your own – or living with someone’s parents.
Then, as you talk more about goals, it doesn’t have to be a sterile financial discussion, says Chatzky, who is also the author of “Women with Money: The Judgment-Free Guide to Creating the Joyful, Less Stressed, Purposeful (and, Yes, Rich) Life You Deserve.”
“Rather than talking about dollars and cents, it’s all about dreaming together – building a life together,” says Chatzky. Discuss where you want to be in a year, in five years and in 10 years, she says. “See if you agree, and put in the numbers once you figure out what your real goals and priorities are.”
Look at it this way: All the concrete factors – the incomes, the assets, the debts and the credit scores – will impact your life together whether you share them or not. So wouldn’t you rather know?
Financial considerations before walking down the aisle
Money is a constant – and so is talking about it
Sometimes, the way someone handles money can be cause for alarm. For instance, you might discover your intended earns a healthy salary but still has a pile of credit card debt – with no discernible excuse.
“You want to find out why,” says Lori Pollack, executive director of the Financial Counseling Association of America. “Because there might be some other issues.”
A good financial discussion with your partner is never one and done. Money is a reality of life, which means you’re going to be talking about it regularly throughout your lives together. Sometimes on a regularly scheduled basis and sometimes – as Chatzky learned during a recent home renovation – as needed. Her approach: “Block out some time. We’ll do it, and it will be done.”
“I do this for a living,” says Chatzky, “and I don’t always want to talk about money with my husband.”
See related: Collaborating with your partner on the finances
Sharing money while retaining financial autonomy
As you look at the money side of your lives together, you also want to “figure out a way to give yourself some financial autonomy,” says Chatzky. And there are as many ways to do this as there are couples. “What works for you is what works,” she says. “There isn’t a perfect solution.”
One popular option: A joint bank account for joint bills, with separate accounts for each of you for discretionary spending.
Having your own money, cash you can spend without having to explain why or on what, “is very important to a feeling of self-worth,” says Karen Altfest, certified financial planner and executive vice president at Altfest Personal Wealth Management.
But don’t forget to track shared money in the process – especially investments.
“When we get married, often we divide and conquer, as far as the household tasks are concerned,” she notes. “And often it’s women who take a back seat in investing. And we can’t do that anymore.”
With the finances, “you want to know where it is, how it’s invested and have relationships with the family financial advisors,” she adds. You’re a partner in investing, says Chatzky. “You’ve got to be in it.”
One trick to setting aside money (almost) painlessly: Automate contributions to retirement accounts and emergency savings, says Barbara A. Friedberg, CEO of Robo-Advisor Pros and author of “How to Get Rich; Without Winning the Lottery: A Guide to Money & Wealth Building.”
This is also a good time for you both to set up (or increase) contributions to your workplace retirement accounts, she adds. “Because the biggest part of building for the future is time.”
At the same time, set up a savings account with the eventual goal of accumulating six to nine months of salary, says Friedberg. But this one is for true financial emergencies only, she cautions. “The money’s not to be tapped because you want to go to Belize for the weekend.”
Beware of the pink tax
You’ve probably heard of the pink tax. On average, women make less money than men and also pay more for some of the same goods and services. But that disparity can be particularly obvious (and galling) when you’re planning for your big day.
For example, outfitting a bride, who is dressed in a gown, accessories, hair and makeup, will run about $2,100 on average, according to a recent survey from The Knot.
The cost for a typical groom: $283.
Another factor at play is that, traditionally, a bride’s parents pay for the wedding. But with many people now marrying later, the couples themselves are shouldering more of the costs.
Still, a bride who’s been dreaming about her wedding day may feel more pressure to “step up and fill in the gap” between what the couple can afford and what she envisions, says Jill Gianola, CFP, owner of Gianola Financial Planning LLC and author of “The Young Couple’s Guide to Growing Rich Together.”
It’s also a question to keep in mind as you save for joint goals like homes, vacations and retirement, says Pollack. If one of you makes more than the other, ask “how are we going to do this?”
See related: The hidden cost of being a woman
Embrace your strengths
Same sex couples may have the edge when it comes to wedding planning and finances.
With male-female couples there are “gender dynamics to engagements that don’t exist with same sex couples,” says David Paisley, a senior research director with Community Marketing & Insights. And many of those come with a price tag. One example he cites: the diamond engagement ring.
As a result, same sex couples are more likely to select the traditions that are meaningful to them – and put their money on those. And without set wedding expectations comes “less judgment,” Paisley says. And that approach can benefit a lot of couples.
So, if your ideal venue is a public park with food trucks for the reception food, go for it. Altfest recalls one of the nicest receptions she ever attended featured lunch with homemade sandwiches. “Twenty years later, I remember it.”
Another couple, who married recently, interviewed a half dozen bands for the reception and selected the most inexpensive one – and the guests were none the wiser.
“People will see what they see – they don’t know what else you were planning,” says Altfest.
Never be afraid to negotiate, either. Ask wedding vendors, “What will $2,000 less get me?,” says Altfest. “What does it cost if the band plays 20 minutes less?” Even a slightly smaller cake could make a difference.
Budgets (and weddings) are about trade-offs
Everything has a cost. For the average wedding (not including honeymoon expenses), the price tag is $33,931, according to a survey from The Knot. Even if that’s something you and your partner are OK with, it’s always best to keep your future together in mind.
“It never occurred to me that we could have used that money to build up a [home] down payment a little faster,” says Gianola.
She wishes she’d asked her parents “if we scale down the wedding a little, could we use that money for something else?” Because when they later found a home, “we were scrambling” for the down payment, she recalls.
“The best piece of advice for engaged couples is ‘remember the wedding is just one day – and don’t neglect planning for the future,’” says Bernadette Smith, CEO of the Equality Institute, who previously spent 14 years as a wedding planner for LGBTQ+ events.
“There is a lot of pressure on folks – whether from peers, or family or social media – to have a perfect wedding,” she adds. “The budget can get out of control quickly.”
But setting a budget and sticking with it is good practice for your financial life together.
“We talk with clients all the time about ‘what’s the trade-off?’” says Gianola. An engagement – and the financial planning you do together – “is such a good opportunity to really take hold of your finances. And it’s a real sense of accomplishment when you do it together.”