There are few adventures in life more meaningful than falling in love and getting to know your romantic partner. Couples talk deep into the night, go on long walks, dissect their previous relationships, and fill each other in on where they grew up and what they studied in school, while sharing their dreams for the future.
But when, exactly, do you ask your new love about their credit card debt or how they plan to save for retirement?
“It might seem trivial, but it’s not. Marriages have foundered on this issue,” said Robyn K. Thompson, President of Castlemark Wealth Management Inc. and a Certified Financial Planner® professional. As a CFP® professional, Ms. Thompson takes a holistic approach to her clients’ finances based on internationally recognized standards of knowledge, skills, abilities and ethics.
Any couple planning to share their lives should make a point of getting to know each other financially, as well as romantically. This process will not only lay the groundwork for milestones like home ownership and having kids, but it has also been shown to diffuse a major source of marital tension.
In fact, research has found a link between financial transparency and happy, successful relationships. A recent poll conducted by Leger for the Financial Planning Standards Council (FPSC) found that couples that share details about their personal finances argue significantly less about money than those who are less transparent (58 percent versus 30 percent).
Of those who share their finances – about 61 percent of Canadian couples – 82 percent said they knew about their partner’s finances before making the decision to merge their bank accounts. Yet, the Leger study found that only about half of Canadians, or 54 percent, talk to their partners about personal finances, and seven per cent admit to lying to a spouse or partner about money matters.
Ms. Thompson, the former co-anchor of Investment Television, said that many younger couples caught up in the rosy glow of planning their nuptials often believe that “things will look after themselves” after the wedding. “The fact is, they won’t,” she said.
As a Certified Financial Planner professional she recommends that couples engage in some very candid conversations before they get hitched. Beginning a marriage should be a happy occasion, she said, and things will go smoother for couples who get the “money talk” out of the way early.
To start, Ms. Thompson says couples have to figure out the division of labour when it comes to financial matters: who will balance the chequebook, pay the bills and manage accounts?
In some cases, couples may wish to discuss a pre-nuptial agreement, especially where there are significant pre-existing assets or other complex arrangements involved, such as trusts. This is a highly specialized area that should be discussed with both a lawyer and a CFP professional, Ms. Thompson advises.
Couples planning to merge their assets should also discuss their debts, and outline their hopes related to children, home ownership, career trajectories and travel.
They should also make a will, secure life insurance and put in place adequate savings mechanisms to cover their future needs.
To ensure couples develop a plan that’s customized to their particular financial situation, and that takes into account all aspects of their changing finances over time, couples should seek the advice and support of a qualified financial planner like a CFP professional. They possess the technical competencies required to assess your financial goals from all possible angles while abiding to a code of ethics that ensures your interests come first.
The best time to engage a CFP professional is before you engage your wedding planner; the second best time is now. A Certified Financial Planner professional will get to know you as a couple – your life goals, values, investment plans and financial objectives. And, like a good marriage, a relationship with a financial planner should be built on trust and a shared vision.
Of course, relationships don’t always work out as planned, and Ms. Thompson also works with clients entering their second or third marriage. In those cases, a “getting to know you period” is equally beneficial, especially as these relationships often come with added considerations.
“Financial planners remain carefully neutral about romantic relationships,” said Ms. Thompson. “But we have a lot to say about the financial traps and pitfalls to watch for in complicated blended or stepfamily arrangements when it comes to remarriage.”
The precise financial questions you and your loved ones confront will vary based on the complexity of your situation. But no matter the couple, the critical lesson is the same: without upfront transparency and a sound financial plan, even our most straightforward financial goals can become difficult to reach.
As with financial success, strong marriages don’t happen by chance… they, too, take planning.