Some couples avoid talking about wealth. But frank conversations can bring you closer together.
Erika Shaw, Family Governance Advisor
Natalie Staples, Wealth Strategist
Being in a committed relationship can change how you spend, save, invest and set priorities. But financial compatibility between two partners, whether married or not, is rarely achieved without exploring what money means to each of you and regularly revisiting that conversation as life evolves.
A critical first step is to agree to have honest discussions about how your experiences in the past may have shaped how you think and feel about money. Making your personal finances—past, present and future—an ongoing part of your life together can help you weather disagreements about money (which often represent deeper divisions over issues relating to values, respect or identity).
It’s never too late to align your values and financial decisions. Explore how to get the conversation started at any stage of your relationship.
Before you settle down together
Financial togetherness generally begins with conversations about how you will manage your money in the years ahead.
It can be helpful to think about how past experiences have influenced your beliefs and behavior. For example, what did you learn about spending and saving from your parents or grandparents that colors the way you manage your money today? Similarly, what do you consider a good use of wealth--and what do you think is best avoided? Do certain money behaviors make you anxious or, alternatively, give you peace of mind?
Countless money decisions await every committed couple. The sooner you begin talking about your finances—and financial expectations—the better equipped you both will be to plan your future together. Start with the basics:
Is having children important to you both? Whatever you decide, long-lasting financial considerations—along with changes in your relationship dynamics, career choices and lifestyle needs—will likely follow. It’s critical to explore together your hopes and expectations. Similarly, if either one or both of you already has children, it’s important to share the details of any financial commitments and how they may change over time.
Setting financial goals
Agreeing on your top financial goals and aligning your saving and investment strategies accordingly can get your marriage off to a strong financial start. What does your current lifestyle look like, and how might that change in the future? Do you want to save for a down payment on a house? Are there any other large expenses on the horizon, such as a vacation or a car? Being specific about the timing, cost and priority of your financial goals can help you better align your current and future resources.
Saving and investing
Once you’ve envisioned what you want life together to look like, think through how you will work together to turn your dreams into reality. How much does each of you earn? How much will each of you contribute to these expenses? Do you each set aside a certain portion of your paycheck for savings or investing? What outlays will you cover separately and/or jointly? Do either of you have student loans, credit card debt or other financial liabilities that may impede your ability to buy a home, start a family or make certain career/life choices? Consider having an independent third party or financial advisor serve as a sounding board in your conversations.
Planning for family contributions
What resources, if any, do you expect each of your families to provide over the years? Will these be merged with, or kept separate from your joint assets?
In some cases, a premarital agreement may be needed to address financial issues that emerge in your conversations. For example, if:
- One of you (or your family) is significantly wealthier than the other
- One family owns a business and wants to retain control and/or avoid future conflict
- Either (or both) of you has children or financial obligations from prior relationships
Agreeing on a financial plan that feels fair to both of you reduces the likelihood of conflict or resentment in the future.
Your first year together
Once you've married or settled in together, balancing practical financial considerations with longer-term goals can help you live the life you want as a committed couple.
Anticipate the future
Think through how future life changes might impact your financial and non-financial lives. Are you going back to school? Changing careers? If so, how would your spending change? If you are considering having children, how would you approach childcare and educational decisions? Do you expect to one day care for aging parents? Consider the traditions, values, and dynamics in your families of origin. What would you like to emulate or do differently? What will you do when disagreements arise? Set ground rules for conversations around money, which may include ongoing meetings.
Create/update estate plans
Each of you should have a will (and possibly, a revocable trust as well) that accurately reflect your intent for your assets and the terms of any pre- or post-marital agreements.1 A complete plan will include powers of attorney for health care and property decisions. Among the things to consider as you plan:
- How do you want the surviving spouse/partner—as well as your children (if any) and respective families—to benefit if one of you dies?
- Who will serve as guardians for your children if something were to happen to both of you?
- Who will serve as executor/trustee for each of you?
- Who should make health care decisions for each of you if you cannot make them for yourselves or for each other?
- How will you pay for healthcare if one of you suffers a catastrophic illness?
Creating a joint vision for the future together can provide clarity, purpose and a sense of security.
1Provisions in a revocable trust can be altered or canceled by the originator/grantor of the trust, who will receive any income earned by the trust during their lifetime. At their death, trust property will transfer to the trust’s beneficiaries.
As you build your life together
Regularly reevaluating personal and financial milestones can help alleviate stress and build excitement about the future. Including children in these conversations, as appropriate, can add fresh perspective to conversations about money, and enhance younger family members’ understanding of the family’s resources and goals.
Revisit financial goals
At least once a year, review your shared financial goals and discuss how they may have changed. For example, have you bought a home and turned your focus to saving for children’s college education? Is there a business opportunity you want to fund? Taking time each year to make sure your cash flow and investments align with your goals will help you anticipate major life changes and prepare for them.
Explore giving strategies
Many couples become more intentional about giving as their wealth grows. Are there certain people or causes that are important to you? If so, implementing a formalized gifting strategy may help you save both on income and estate taxes. Discuss where your charitable priorities align—and where each of you wish to support a cause of your own. Charitable giving can also be a great way to teach your children about why supporting certain causes and/or communities means so much to you, personally.
Review your estate plan and marital agreements, if any
Review your estate plan both periodically and following major life changes to determine whether or not it reflects your intent. For many couples, a life-changing moment occurs when children/grandchildren are born or become adults; when one or both partners retires; or you move. Additionally, unforeseen circumstances may arise that cause a marital agreement to become unconscionable such as one spouse becomes ill and can no longer work and support themself. In such instances—or if doubts and questions arise—consult with a local family lawyer or an estate planning attorney.
Protect important information
Keep important documents in a secure physical or digital location that both you and your partner can access. These should include recent income tax returns, social security numbers, online account usernames and passwords, personal balance sheet information, birth and marriage certificate, passports and key account numbers, such as for credit cards and household utilities. Transparency promotes trust and peace of mind.
It can be easy to lose track of your financial goals as you tackle careers and raise children. Setting aside time for financial planning conversations can keep you moving forward.
The runway to retirement
Celebrate what the two of you have accomplished together—and begin planning for your next chapter. You may find that your priorities and the ways you want to spend your time are changing. How will you find purpose and satisfaction when you stop working? If there are differences, try to find a solid middle ground. If one of you is still working, discuss how you will manage different schedules and life rhythms. Among the many other things to consider:
Evaluate lifestyle choices
Where will you live? If you will maintain residences in multiple jurisdictions, be sure to follow all legal protocols if you plan to claim residency for tax purposes in your new state. Additionally, consider speaking with an estate planning lawyer about putting your out-of-state home in a revocable trust, so that you will not be subject to probate in multiple states.
How will you spend your time once you stop working? Board memberships? Volunteer work? Time with family? Travel? Hobbies? Learning new skills? It can be both exhilarating and challenging to have the freedom to spend your time as you like. Setting personal/social goals can make life after work more satisfying. Many people find they spend more money in their first decade of retirement; often, because they give more to family. Expenses tend to decrease in the middle years of retirement, and increase again in later years, primarily due to healthcare and charitable giving.
How do you each feel about healthcare in retirement? Medicare eligibility begins at age 65; you will need interim healthcare coverage if you retire earlier. Enrolling in Medicare can be complex given the options you must choose from, so you may wish to seek professional assistance. Moreover, you may need new coverage for family members who were previously covered by your employer’s health plan during your working years. Finally, do you want to age in your own home or move to a retirement community that has nursing or assisted living capabilities should you need them?
Would both partners feel empowered to make critical financial decisions in the event of a sudden death, incapacity, or other emergency? If not, it’s time to get organized, especially if only one of you handles the day-to-day finances. Make sure you both know where important records are kept, from which accounts bills are paid, and which trusted advisors to call upon to help you.
Consider your legacy
How do you want to be remembered? Do you want to contribute to the well-being of future generations of your family? Support your community or faith? Help sustain a charity or educational institution? Make sure your estate plans accurately reflect your wishes for the disposition of your assets after you are both gone.
We can help
Whether your relationship is new or well-established, your J.P. Morgan team is here to support your financial life as a couple. Your team can also provide you with additional information on the many topics covered in this article.