HM Logo
HM Logo Mark

5 Financial Facts To Consider As You Prepare To Say “I Do”

September 5, 2022


If you're engaged or contemplating a big commitment like marriage, you've probably already started thinking about the details of your big day: the guest list, the venue, the dress, and, of course, the honeymoon. 

But before you commit to a lifetime with your future partner, you’ll want to make sure you're both on the same page financially. After all, money is a major source of conflict in many relationships. In fact, money fights are one of the leading causes of divorce.

In this 3-part series, we’ve partnered with Ed Coambs – Certified Financial Therapist and author of the book The Healthy Love and Money Way: How the Four Attachment Styles Impact Your Financial Well-Being – to discuss the impact that money can have on happiness and relationships.

To kick off the series, we are going to look at five financial factors that you should consider before you tie the knot for a happier and healthier union.

1.  Nearly three in four (73%) married or cohabitating Americans say financial decisions are a source of tension in their relationship.

Nearly three-quarters of married or cohabitating Americans say financial decisions are a source of conflict in their relationship. Almost half (47%) of these couples admit that the stress caused by financial decisions has harmed their intimacy with their partner.

These findings are not entirely surprising. Money is a difficult subject for many reasons – the most basic one perhaps being that it means something different to everyone. For example, to some people, money is simply a means to an end. Others see money as a source of security and independence. For others, money equates to happiness.

Unfortunately, many couples avoid talking about money before they get hitched, often believing or trusting that the other person will naturally make sound financial decisions or share the same financial goals or styles. But as the findings from the AICPA show, that is not usually the case – a fact that becomes apparent later on when tensions arise as a result of financial decisions.

Here are some of the most common ways financial decisions can cause tension in a relationship or a marriage:

  • Making big purchases without consulting a partner. To avoid conflict, set a limit for when you need to consult with your partner before spending. This allows one partner to have some freedom in spending money while assuring the other that they’ll be consulted before any large purchases.
  • Inability to compromise on spending. If you’re more of a saver while your partner is more of a spender, you are likely to clash quite often when it comes to financial decisions. The key to making a relationship like this work is taking time to understand and appreciate each other's styles and then finding a middle ground.
  • Financial infidelity. This occurs when couples lie about or conceal financial transactions or assets from one another. Understand your own financial mindset and philosophy – as well as your partner's – before you tie the knot so you don’t feel compelled to lie or hide things from them later.
  • Approach to debt. If there is debt in a relationship, couples can disagree on how to spend their disposable income. One partner may want to throw all the extra money after expenses to debt payment, while the other might want to put it on something else such as investing or saving for retirement. Keeping communication lines open and working together to find a solution that works for both of you is critical to resolving such disagreements.

2. "Seventy-eight percent of couples who talk weekly about money say they are happy, as opposed to 60 percent of couples who talk every few months and 50 percent who talk even less frequently."

According to a study by TD Bank, nearly 8 in 10 couples who talk weekly about money say they are happy, as opposed to 60% who talk every few months and 50% who talk even less frequently.

The period before you get married is a great time to cultivate a culture of regular communication about money. If you’re already in the habit of discussing finances with your partner on a regular basis, it’ll be easy to maintain that culture once you are married – and as the research shows, this can foster relationship happiness.

Check out part two in our series on money and your marriage.

Talking about money on a regular basis also infers a proactive rather than a reactive approach to money management in a relationship, according to Ed Coambs.

This means that instead of having discussions when financial decisions have already been made – an approach which can often lead to fights, especially when one partner does not agree with the financial choices that the other partner has made – these discussions are held in advance, and agreements or compromises are made, thus avoiding conflict.

Holding money discussions frequently with your partner also keeps small problems from festering and eventually snowballing out of control. If your partner has a particular money habit or choice that you disagree with or that bothers you, it means you’ll have a chance to bring it up with them sooner and hopefully address it.

Talking about money frequently also helps to foster a sense of free and open communication, which can ultimately increase trust levels and the overall quality of the relationship.

3. "Couples who pool all of their money (compared to couples who keep all or some of their money separate) experience greater relationship satisfaction and are less likely to break up."

Before you get married, each partner will likely have their own bank accounts, credit cards, investments, and other financial assets. Once you’ve tied the knot, one of the big decisions you’ll have to make is whether to combine your finances or continue to operate independently.

Every couple is different and will have a unique viewpoint on this topic. It’s completely up to the two of you to decide what’s best for you. Be careful however, because according to research, the decision you make could have a lasting impact on the long term health of your relationship. 

In a study titled, “Pooling finances and relationship satisfaction”, the authors set out to determine whether there is a link between pooling finances and relationship satisfaction.

The analysis found that couples who combine their finances in a joint account (as opposed to those who keep all or some of their money in separate accounts) enjoy greater relationship satisfaction and are more likely to stay together. The authors noted that joint accounts “increase feelings of financial togetherness—making purchases and financial goals feel shared.”

Coambs breaks down the relationship between pooling finances and relationship satisfaction further: "Pooling money conveys that there is a level of trust and mutuality and a sense of ‘we-ness’ in the relationship. By pooling resources, you are allowing yourselves to be financially naked with each other – there is nothing hidden."

Combining finances often means that both partners are fully invested in their relationship and committed to one another. This can help build trust and, by extension, a high level of satisfaction in the relationship and lower the chances of a breakup.

Other practical advantages of pooling finances that can contribute to greater relationship satisfaction are as follows:

  • Your financial life is simplified – you’ll have fewer financial accounts to manage and fewer banking fees to pay.
  • You benefit from more transparency in that both of you have access to and can see all account activities.
  • In the event of an emergency, both partners have access to all financial resources.
  • If one partner earns a higher income, it can be shared easily. This can enable the lower-earning partner to do things they would typically not be able to do with their salary alone.

4. "Couples who communicate well about money are more likely to expect to live a comfortable lifestyle in retirement."

According to a survey by Fidelity, most American couples rate themselves quite highly in terms of their money communication skills, with roughly 71% stating they communicate "very well" with their partner when it comes to money. Interestingly, the same study found that couples who communicate well are more likely to expect to have a comfortable retirement (79%), as opposed to 35% of those who do not.

Communicating well about money boils down to being open and honest while also empathizing with your partner's money mindset – that is, understanding the logic behind how and why they spend money the way they do. This not only builds trust but also a solid foundation for long-term financial planning, including retirement.

Basically, when you are able to communicate well with your partner, it’s easier to envision your financial future together.

According to Coambs, "If you can imagine yourself as a couple in the future, then you are likely to plan for it. Being able to communicate well about money makes it easier to have those proactive, future-oriented conversations."

Consider honing your financial communication skills during the dating or engagement phase of your relationship through things like listening to financial podcasts, reading books, or even consulting with a financial therapist. This will make it easier to talk about money and plan your financial future once you are married. 

That said, don't feel like it's too late to learn or start better financial communication if you are already married. Although it’s easier to maintain an open line of communication if it is established from the outset, it's something that you and your partner can also start even after exchanging your vows.

5. "84 percent of Americans agree that romantic relationships are stronger and more satisfying when financially stable."

There's no guarantee that financial security will lead to perfect harmony, but according to a study by Ally Bank, it's usually an excellent predictor of relationship stability and satisfaction.

Coambs explains that "financial stability provides predictability and flexibility." According to him, the human mind and body have a natural stress response to financial instability that says, "This is threatening or dangerous – what can we do?" 

When you’re constantly worried and anxious about next month's rent or mortgage payment, for example, you’ll have little to no time to focus on the development and quality of your relationship. This dynamic can lead to an unhappy and unsatisfying partnership. 

Conversely, if the economic environment in your relationship is predictable and stable, stress levels will be lower and both of you will experience life as more satisfying. The time that would have otherwise been spent trying to make ends meet or worrying about finances will be spent on other relationship-building activities, such as spending more time with one another.

It doesn’t stop there, because as Coambs points out, the association between a happy and satisfying relationship and financial stability is actually reciprocal in nature. 

 If you have a loving, stable, and safe relationship, you can put energy into building financial stability. And as the research shows, additional financial stability will make the relationship even stronger and more satisfying.

Don’t Let Money Issues Dampen Your Incredible Relationship

It’s clear that money has a direct impact on the success of your relationship. If you're engaged or thinking about getting married, have a discussion with your partner about money before you officially say “I do”. Not only will this show you where you stand and how you fit together financially, but it’ll also help you establish a healthy foundation for dealing with any financial issues that arise down the road.