Marriage as a formal union of two people, or any community that involves cohabitation, certainly involves finances for good as well as for bad in their union. Perhaps it is better to speak of the concept of household to include all forms of financial communion, or at least what is to be expected in cohabitation, namely the sharing of income, expenses, and the like. You should discuss financial topics before marriage and we bring you reasons why.
70 percent of failed marriages are due to financial problems and disagreements
Not long ago, in 2016, an OECD report was published that 70 percent of failed marriages are actually due to their failure, and precisely due to marital problems caused by finances.
Significant differences in income and expenses leading to lack of money are most often cited as the reason, but often the reasons include disagreements over how partners dispose of money.
There is no universal model for financial management in marriage and one could say – what suits the spouses is acceptable as long as both partners are satisfied with it.
The problem arises when partners, because of their fears, attitudes, insecurities, etc., accept each other’s undesirable behaviors in every area of the partnership, including finances.
Real life situations
We know of an example where each of the partners set aside an equal amount of money to buy groceries, etc. before going shopping, according to this principle they also covered other expenses and shared the savings. Personally, we have the impression that the idea of togetherness was not particularly emphasized in this case. We do not know if that’s why they divorced, but they are no longer together today.
In fact, we often have a more financially dominant partner in a household, not only in terms of income, but also in terms of decisions about spending, investments, etc. Although women earn on average about 20 percent less than men, there are a large number of households where the woman has a higher income.
In this example, we personally know marriages that are very good at balancing their obligations and opportunities and cope well with the fact that the woman earns more, in such a way that the development of healthy communication, respect, tolerance and understanding, and support in other areas dominate life together. The prerequisite, of course, is that this balance of power suits everyone and that no small financial contribution is transferred to the partner.
Often it is the men who are under pressure from stereotypical societal expectations, and here is where women need to show special understanding and respect.
Of course, we also know those who divorced because of finances, because a man who earned less in the marriage, at the same time, through misunderstandings, pressure, wrong behavior, or simply his own laziness and without the desire to develop himself, contributed to the fact that the differences in all areas have deepened further, or a woman simply wanted another relationship…
These examples do not apply only to marriages in which women earn more, because somehow there is still a much more socially accepted and present model of marriage, in which the man is the financial support of the family.
We also know of marriages where one partner (usually a woman) does not work to support the other’s career, and things work well.
The real life situation is countless, but there are some things that are good to think about in advance, especially today, when marriages are always later, when we already go into marriage with some income, obligations, credits, assets and financial habits and even (in)knowledge.
11 topics you should discuss before the wedding
Before you get married, it is good to talk about:
1. income and existing liabilities
Income of both parties, about existing obligations (e.g. student loans, car loans, if any…) and how these obligations will be paid during the marriage
2. existing assets
Existing real estate, whether it was previously purchased and paid for in full, and especially whether it was financed by a loan that will continue to be paid during the joint life and that significantly affects the family budget.
3. financial habits
Financial habits, how we spend money, what values we support, etc.
4. risk tolerance
The degree to which each partner is willing to take risks in order to understand preferences for future investments.
5. (pre)marriage contract
Many important issues can be resolved through a prenuptial agreement. Whether the partners have large estates or live on relatively modest means, they can certainly benefit from the protection and security that a prenuptial agreement provides.
6. financial obligations
Financial obligations to extended family or obligations to partners and children from previous marriages.
7. manner of participation in the family budget
How you monitor and participate in the family budget.
8. financial goals
Current financial knowledge and shared financial goals for the future.
9. unpredictable situations
Unforeseeable risk situations that may occur and ways to protect against them (e.g., insurance, savings, etc.).
10. financing children
How to finance expenses related to having children together.
11. what can make it easier for you?
Anything else you can think of that might make future joint financial management easier.
If you are already married, it is not too late to go over the previous issues, change bad financial habits and improve financial behavior.
Of course, in marriage, the most orderly financial attitudes, i.e. goals, need to be constantly adjusted. Not only life circumstances change, but also people change.
Marriage should be initiated by love, but the consequence is much more than the initial infatuation and idealization. It is important to know that finances and attitude towards them are one of the inevitable issues in marriage that should not be ignored, because they can really contribute to positive joint progress and development, but also to bad relationships and even divorce.
Basically, as with everything – both in marriage and finances – it is necessary to be full of understanding, have a positive attitude, realistic expectations and do not forget the saying – the agreement builds a house.
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