3 questions to ask before marriage
(MoneyWatch) Spending money on your honey for dinner, flowers and vacations may be romantic and fun. Talking about money -- not so much. That's probably why most people don't have in-depth conversations about their finances until after they wed.
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But waiting until after you marry to discover that your partner's finances are a mess or to learn they have a completely different perspective about spending and saving can lead to bigger problems.
I think couples who don't have honest conversations about such matters make a big mistake. Whether you're considering engagement or have been married for years, here are three financial topics to raise with your partner.
Show me the credit report
A person's credit report contains a gold mine of financial information. Every financial detail of your partner's credit and debt-payment activities -- good and bad -- is spelled out clearly on a credit report. When you review a report and you know what to look for, you'll quickly see if there's a history of paying bills on time or late payments. You'll also see exactly how much debt your partner is carrying.
It's a good idea to review your partner's credit report periodically even if you've been married for some time. You may discover that your spouse has opened a new credit card or run up the balance on an old card that you are not aware of. With more people signing up to eliminate paper statements and managing their accounts online, there may be more accounts open than you think.
While you're at it, be sure to check out your partner's credit score. A clean credit report doesn't necessarily translate into a high credit score. This is definitely something you want to know about each other before applying for a mortgage or a car loan, particularly in today's tight credit market.
Opening joint credit accounts
Those new to a relationship should have an in-depth conversation about whether to open any new credit accounts in both names. Most people bring a collection of credit cards and debt into their relationship. Over the years, credit offers from favorite retail stores and hard-to-resist rewards cards may have added to your or your partner's stash of plastic. Remember, just because you are married, you are not legally responsible for the debts that your spouse owes on credit accounts solely in their name. But once you put your name on a credit account with your spouse or a partner, both parties are responsible for all debt, regardless of who spends and racks up the debt.
If you are in a new relationship and you do decide to open a joint credit account, consider setting a low credit limit on the card, say, $2,000 or $5,000 dollars, at least initially. This will protect both of you while you learn more about, and become more comfortable with, each other's financial behavior.
Who is the spender and who the saver?
Typically, one person winds up up paying the bills and managing the household finances, while the other does most of the spending on food, clothing, etc. Discuss these roles and determine which person is best suited for one role or the other. It's important to work together and communicate frequently about spending and saving. By doing so, you may be able to eliminate those conflicts that often arise when people have different attitudes toward money.