Successfully merging your money when you marry isn't as easy as slipping rings on each other's fingers. Like marriage itself, you have to work at it. But learning to manage money as a couple can contribute mightily to your own personal tale of happily-ever-after.
"Some people don't put much thought into that financial merger," says J.J. Montanaro, a certified financial planner? practitioner with USAA, "and they put no effort or communication into it. Big mistake."
In fact, 21 percent of couples fight over money daily or weekly, 10 percent fight monthly and 46 percent put on the gloves every few months, according to a 2008 study conducted by California State University, Los Angeles for Elle Magazine and msnbc.com.
But you can beat those stats and save your marriage from money battles before they start. Here's how.
Communicate. That's the key to money success before and after your wedding day. Each partner comes to a marriage with different money management styles. One might be a saver; the other, a spender. "So much of any marital success is based on compromise and meeting in the middle," says Montanaro. "The same goes for managing money as a couple."
Once you're married, financial date nights are essential to regularly talk about your progress and make sure you're both on the same page about money decisions. Spouses-to-be who discuss their money views and work together on how they can use their pooled resources may discover they enjoy the process -- discovering that together they potentially have more financial power.
Share your goals. As singles, you probably had some kind of financial goals, whether they were vague, such as retire at the beach one day, or specific, such as own a home in three years. Write down those ideas and compare your lists. Then try to come to an agreement about how those translate into joint financial priorities for your future as a couple.
Your hit list should include budgeting, saving, retirement, debt management and which money decisions will be made as a team and which will be made individually, suggests Karen Goodfriend, a CPA and personal financial specialist.
Include short-term goals, such as buying a house, new furniture or planning a vacation, and long-term goals, including college planning and retirement savings. "Recognize there may be different perspectives, which is normal, and there isn't a right and wrong," says Goodfriend.
You can take your lists and meld your objectives into a family wish list, which will allow you to create a financial road map to reach those goals. If you have differences of opinion that you can't resolve, enlist the help of an objective financial planner.
Create a spending plan. This plan will help you follow your financial road map. Goodfriend says putting it in writing will make it easier to see where your money is going. You'll be able to plan for priority spending, eliminate waste and see if you're on target to reach your goals.
Some married couples use joint accounts to pay the bills, while others use the yours-mine-and-ours approach. The latter might share a joint account for household expenses, then have individual accounts for mad money, funds to pay for gifts or other surprises.
Plan for the long term. Now that you're working toward the same goals, see if your existing investments complement each other. "Look at all the different pieces of retirement plans and how they're invested," Montanaro says. "Next, examine how those plans are going to look together because you're going to retire together," says Montanaro.
If you were operating two households as singles and you'll now be moving to one, your overall housing costs may go down, giving you a way to bump up your savings and investment rates for long-term goals.
Consider your credit scores. Make sure you know your partner's credit history and divulge your own before you say, "I do." This is the time for full disclosure. "If one person has credit issues, the sooner the issues get addressed, the better chance to resolve," says Goodfriend. "Once married, the couple will likely be taking on joint obligations, and if one spouse has a poor credit history, it could negatively affect the couple's ability to get credit on favorable terms."
The spouse with the poorer credit history could even benefit from a credit marriage. If the spouse with solid credit adds the spouse with poor credit onto his or her credit accounts, the poor credit spouse's credit score may benefit, Montanaro says.
-- Courtesy of USAA