As a wedding planner, Lora Grafenstein-Kinzel has gleaned a lot from her clients about couples and money. There are those who haven't had the money talk despite the wedding being weeks away. There are the ones who don't agree on most spending decisions, or who don't make any decisions, acquiescing to the mother of the bride. Then there are the couples who clearly have a major problem communicating about money, but seem in denial, choosing to believe that once the wedding is done, everything will be fine.
She has news for them. "The wedding isn't going to be the only stressor in their life. A new house, loss of job after the marriage, babies -- those are all stressors in the relationship. They need to work on [their issues] before the marriage," said Grafenstein-Kinzel, owner of At Your Service Weddings in Minneapolis. "They need to get their finances on the same page."
Planning a wedding presents a natural opportunity to discuss everything from income and debt, to budgeting and establishing priorities. However, a recent survey from Country Financial shows that about half of couples don't talk about handling the family finances before marriage. And money is a major point of disagreement for most couples, married or not.
Jon Bauer said having the money talk with wife Sara Ohotto Bauer before getting married last year helped them to make more informed decisions about wedding expenses and develop a plan for gift money.
He admits that the initial conversations were a bit awkward. But discussing financial matters is a necessary part of making a life together. The conversations helped the couple understand each other's financial values as well as create a practical plan for managing their bills. They decided to open three joint accounts -- one for bills, one for discretionary expenses such as vacations and eating out, and one for wedding gift money, which was renamed the baby fund when the couple learned they were expecting a child. They still have their own credit cards so gifts for each other can be a surprise.
James Bryan, a certified financial planner with Cahill Financial Advisors in Edina, said some new couples tend to get carried away and make a lot of big financial decisions all at once. "They have the wedding, they have the big honeymoon, and then they want that beautiful home next to the Cleavers."
He urges couples to pause and assess their life goals and their financial situation. Before buying a house, which comes with a host of additional expenses beyond the mortgage, "get rid of debts, build up savings and max out retirement plans," Bryan said. Don't feel rushed into it by the market. He thinks interest rates and prices will still be low a year from now.
Say you've found your perfect match, but his credit is far from flawless. It's important to understand that marriage doesn't combine your credit histories. Each person maintains individual credit reports and scores. If you have a high 800 credit score, it will stay 800 so long as you maintain your primo credit habits.
The trouble arises if you need both incomes to qualify for a loan. The lender will pull both of your credit histories and your spouse's lower credit score will probably mean a higher interest rate. And that means you'll pay more over the life of the loan.
The good news is that "a poor score is not something you're going to be stuck with forever," explained Barry Paperno, consumer affairs manager for the FICO credit score.
So how do you improve your credit? Mainly, pay your bills on time and lower the ratio of debt you carry to the amount of credit you have available.
Another trick: Add your honey as an authorized user on your credit card, although remember that you are responsible for that card and need to discuss clear spending boundaries with your partner. This move won't turn bad credit into good credit overnight, but it "can certainly accelerate the recovery," Paperno said.
Finally, a couple needs to discuss more than the financial nuts and bolts that keep a household happily humming along. Having a strong money relationship is about having good, open, and honest communication.
"Be assertive. Let your partner know what you think, feel or want," suggests David Olson, a professor emeritus at the University of Minnesota and president of Life Innovations, a Roseville-based company that trains premarital counselors. Olson also says partners must be active listeners, able to repeat what their spouse just said to show they were paying attention and have heard the other's point of view.
Kara McGuire • 612-673-7293 or email@example.com. On Twitter: @Kara_McGuire