Whose money is it, anyway?
Is money mine and yours, or ours? How each of you views ownership might make or break your marriage. Whether you live in a community property state also makes a difference.
The legal definition of “community property” is, in plain English: “All earnings during marriage… are owned in common and all debts incurred during marriage are the responsibility of both spouses,” according to Nolo.com.
If you live in Arizona, California, Idaho, Nevada, New Mexico, Texas, Washington or Wisconsin, assets and debts acquired during marriage are legally shared.
It’s not uncommon for one spouse to earn more than the other. This may breed resentment or jealousy. Are you and your partner willing to put all earnings into a joint account and discuss expenditures before making a purchase? If not, how much does each spouse get to hold out for individual use?
Spending Habits Can Cause Conflict
When both partners like to spend, neither one sees a problem until they are sinking in debt. Marriage problems that lead to divorce surface when neither spouse is willing to curb his or her own spending. When people get a sense of identity from their purchases, overspending is a difficult habit to break.
The opposite of overspending is underspending and hoarding, filling a basement with things he “might need someday.” Those who underspend are seldom concerned with luxury. If you like new furniture, you will have a conflict with a partner who prefers to make do with old things.
Discuss spending habits with your future spouse. Most people’s spending behavior falls on a continuum between overspending and hoarding. Take an honest look at how your spending habits are similar and different. Working toward common goals, such as a vacation or saving for your child’s college tuition, may help keep you both on track.
You already discussed having children, and you both are looking forward to having a family someday, but you have a lot more to talk about. There are fundamental questions that too many couples do not discuss before getting pregnant.
Affording the baby goes beyond saving up for a nursery and some time off from work. Who will take care of the baby when family leave is used up? If one parent stays home, there is less income. After you factor in the cost of daycare, you may be just as well off financially staying home.
Discuss the importance of education. Some couples move to an area with a reputation for good public schools. Others prefer paying for private schools. College is another expense with which some parents want to help their children. That means more saving or planning and sacrifice while those children are growing up. Do you and your betrothed feel the same way about these issues?
The key in discussing money issues with your partner is to have a mutual understanding about your attitudes toward money, your common goals and how you both plan to reach them. Open and honest communication now may save you expensive heartbreak later.