Talk money to me

Couples and finances on Valentine’s Day

Couples in a serious romantic relationship really don’t want to talk about money. And it’s probably not quite the suitable topic when you’re dating early in a relationship. But when things get more serious, open, honest communication about financial habits, goals, concerns, and problems becomes more important.

That kind of discussion can tell each of you how your partner handles spending and saving. How they view credit and debt, how they feel about budgeting. Couples who are engaged need to have even more serious talks about money, including how each has handled their money as singles, whether there are any large credit or other debt issues looming, how you view investing and what investments you have – even what mistakes you’ve made.

Couples who are ready to tie the knot need to get down to a really granular level. While it may seem mundane and nitpicky, it’s important to sort out who will handle the domestic budgeting and bookkeeping – paying the mortgage and utility bills, for example, how to share living expenses, and whether to have joint or separate bank accounts. Get a handle on this now. In my practice as a financial advisor, I’ve seen these types of money issues become major sources of friction after marriage if couples aren’t honest and open before the wedding day.

So here’s my list of key things couples need to discuss:

Financial framework. Talk about your longer-term goals – children, childcare options, where you will live, how spending and income patterns will be affected.

Family net worth. What are each of you bringing to the marriage? What do you own, and what do you owe? What assets have specified individual ownership or beneficiaries? Think of RRSPs and TFSAs. Are there any trusts with prior restrictions on accessing funds? Could this be a source of future marital friction? Once you’re married, assets and liabilities are shared, so make sure everything is on the table now to avoid surprises after you’ve tied the knot.

Investment persona. Often one partner in a union will be an aggressive investor, possibly given to speculation or gambling, while the other will be more defensive and conservative. This can definitely be a source of future friction, especially where shared assets are concerned and when you start a family. Work with a financial planner to come up with a plan that encompasses all your combined assets and satisfies both of your investing styles without putting anyone in a strait-jacket. Yes, it can be done with a detailed, comprehensive financial overview and plan.

Protecting what you have. If neither of you have life insurance (pretty typical for young singles), consider getting some now. At this stage in your lives, it’s very economical and provides a good level of protection, espcially when the kids start coming along. For instance, term life insurance with a 10-year term is the most common and least expensive type of insurance to buy. It can be even more economical for a couple with joint first-to-die policy.

Couples with existing insurance coverage will probably want to change the beneficiary of their respective life insurance policies to each other. And they might also also want to increase coverage, again if children are involved or expected. An insurance review should also look at any existing employers’ extended health coverage and disability insurance, to see if one or the other’s policy offers spousal coverage. That could add up to big savings on premiums.

Getting advice. This is a lot to deal with on your own. And it’s really the last thing you want to do if wedding bells are in the offing. That’s where a good financial planner comes in. Financial advisors with the Certified Financial Planner designation can help couples identify and deal with these and many other financial matters before marriage, so they don’t become problematic afterwards. They’ll create a realistic, practical plan for you and build an investment portfolio to meet both your short-term and longer-term financial goals.

Robyn Thompson, CFP, CIM, FCSI, is the founder of Castlemark Wealth Management, a boutique financial advisory firm specializing in wealth management for high net worth individuals and families. Contact her directly by phone at 416-828-7159, or by email at rthompson@castlemarkwealth.com for a confidential planning consultation.

Notes and Disclaimer

The foregoing is for general information purposes only and is the opinion of the writer. Securities mentioned are illustrative only and carry risk of loss. No guarantee of investment performance is made or implied. It is not intended to provide specific personalized advice including, without limitation, investment, financial, legal, accounting or tax advice. Please contact the author to discuss your particular circumstances.