Marriage And Financial Woes

When it comes to finances, it's best to disclose all information to your spouse. Stephanie AuWerter, Editor of SmartMoney.com, discusses the top pitfalls that tear marriages apart.

One major financial decision that newly married couples face is whether or not to merge their bank accounts. It particularly affects couples who marry later in life. "They're used to handling money on their own and they're simply uncomfortable with the situation," says AuWerter. She suggests creating three accounts: a "his", "hers" and "ours" account. Handle all household expenses from the "ours" account, but this still leaves each spouse his or her own money to spend as they see fit.

A huge amount of debt, however, is the exception to the joint account "rule". If one partner is coming into the relationship with huge student loans or mountains of credit card debt, it's important to keep your accounts separate. "Should that debt go into default, the debt-free spouse will not be held responsible," says AuWerter.

However, AuWerter cautions that if you eventually divorce, some states still hold spouses accountable for that debt, even if you kept your accounts separate. Try to sign a pre-nuptual agreement, or a post-nuptual agreement if you're already married, to avoid complications.

While opposites attract, if one spouses is a spender and the other is a saver, it can wreak havoc on a marriage. "It can lead to huge fights when one spouse is caught off guard with a surprise bill," says AuWerter. Sit down and make a buget together, and most importantly, stick to it. Try to set up your accounts so that money is automatically transferred into savings. Also, save together for big ticket items like a new living room set or a car.

A relationship can also be strained if each partner has a different view on investing. "Find yourself a good fee-only financial planner," says AuWerter. "Your risk level should largely be based on your investment horizon... Being too risky or too conservative can lead to financial ruin." A financial planner can help you work through your investing differences and plan out a balanced portfolio.

Finally, tell the truth! "Big money secrets are a problem," says AuWerter. "Now is the time to come clean. It's better to own up to the problem than to have your spouse find out another way." So while a little fib (maybe that sweater really wasn't on the sale rack) may not hurt you, big secrets like a hidden account or separate credit card will.

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By Erin Petrun