Recently married or planning a wedding? Besides insuring your new life together, one of the most important aspects that should be planned efficiently during this major life event is how you’ll be managing your money. To help those who are ready for the money talk, I spoke with Melanie Adams, Financial Advisor at Sun Life Canada about financial planning for couples.
When is a couple ready for financial planning?
MA: It is important to discuss finances in order to learn how your partner feels about money. You don’t necessarily have to be getting married to start discussing your finances. I would say a couple is ready for financial planning when they are ready to get serious about their future together. You want to understand what they will bring to the table from the past – including any debt – in order to better plan ahead for your future together.
Money can be a difficult topic for some couples; what tips can you offer to make the conversation easier?
MA: Money can be a stressful topic. One of the biggest things – especially if you both have two different approaches to money – is to listen to your partner and not be judgmental. One study found that couples who fight about money once a week are 30% more likely to end up divorced than those who disagree a few times a month. Couples should be ready to fully listen to one another and be able to make compromises. Understanding each other’s views on how to save versus spend is especially important when building out your budgets and plan.
What should couples prepare or bring to their first meeting with a financial advisor?
MA: Before meeting with your advisor, you should first discuss your goals. Each of you should list out your individual goals first, then discuss them together and come up with some common ones. Just because you are a couple, it doesn’t mean you have to share the all same goals.
Be ready to share your current cash flow, budget, and how you’re working with money at the moment (such as joint or separate accounts). You should also prepare a list of questions, along with information on your current insurance benefits (medical, dental, life), savings plans, pension programs, and RRSPs from your workplace. All of this information will help the advisor make helpful suggestions.
How can couples prepare for major expenses such as a wedding, home, and car all at the same time?
MA: My number one tip is to set a budget per goal. Couples should come up with a budget they feel is accurate and determine what their spending habits are. Look at your list of expenses and consider reprioritizing some items (such as cooking at home versus dining out). Once you have a list of goals, allocate money towards them through each paycheque into a savings account.
What do you think about having specific joint accounts for paying bills or saving for a down payment?
MA: There really is no right or wrong way. I recommend going with whatever works for the couple. Some couples like to keep their money separate and have one joint account for bills, while others have a joint account but separate emergency funds.
What is your number one financial advice for newlyweds?
MA: Communication! Typically, most couples have one person in charge of day-to-day banking and bills. However, a couple’s joint future and financial success together should not rest on the shoulder of that one partner. I recommend having monthly money meetings to come together and review your financial situation. This would be a good time to set goals and plan for expenses that are coming up.
Quite often you can start off with the best intentions, but forget to come back to the table to keep each other informed. Not only can it be difficult for one person to manage, but it can lead to not reaching goals or being on same page. Create a plan, communicate, review, and live a happy life together!
Allstate Canada works together with Sun Life Financial to provide our customers with an extensive range of insurance and investment products beyond Home and Auto Insurance, including Life, Disability, Critical illness, Long-term Care, and RRSPs, annuities, RRIFs, GICs, etc., (excluding mutual funds). Learn more.