Getting engaged is one of the most exciting events in a couple’s journey. It precipitates a new and intense swirl of planning and decisions that can quickly drain bank accounts and, at times, rational thinking. Before getting lost in the sounds of wedding bells, here are some important money talks to have before walking down the aisle.
Cards on the Table
When joining lives together it is very important for couples to have an upfront and honest conversation about the current state of their finances. Full disclosure around income and debts can be uncomfortable but is vital to starting your life together on a foundation of trust.
Setting a Budget
First, on the minds and lips of many couples is the wedding budget. This should give the partners insight into the values and priorities of their significant other and could lead to some surprising revelations. One of you may envision a simple, elegant evening with only close friends and family, while the other dreams of a grand and extravagant party for the ages. But how do you resolve these differences, honor the needs of your partner and keep planning within your means?
“It’s important to recognize that once the wedding is over, married life begins and choices made today can affect your future together,” Financial Advisor Courtney Phelps. “If your individual wedding dreams are too disparate or have become too contentious to navigate alone, a couple's counselor might be able to help you unpack the fears and desires behind your nuptial expectations, while a financial advisor can help you determine what is reasonable from a monetary standpoint.”
It is a good rule of thumb not to spend more than 15% of your annual income. With venue and catering comprising over half of the expense of most weddings, it is important to select those details early on and with the overall budget at the front of mind.
Saver or Spender
Wedding planning is a time when attitudes about saving and spending may come to a head. “Most couples I see are a pairing of one saver and one spender and they work in unison to create a life together,” Courtney says. “One ensures that the long-term needs are met while the other reminds that life is to be lived and it is ok to enjoy the fruits of our labors from time to time.”
Issues can arise when couples are both spenders or when one or both have attitudes about money’s purpose that are rooted primarily in fear. In a union where both people are spenders, it is more important to work closely with an investment planner and a tax advisor to ensure that someone is watching out for the future and create boundaries within which you can enjoy the money that comes in while having the reassurance that the future is being accounted for.
“I have also seen couples where poverty, homelessness or other financial stressors have created a genuine fear of either not having enough money or sometimes, not being able to obtain something they want or need,” Courtney says.
This can create a situation where a large expense like a wedding can create deep anxieties in the person and lead to conflicts with their partner. In these cases, again seeking the guidance of a counselor and financial professional can help couples work through these fears to be able to enjoy the upcoming celebration.
Income
If you haven’t discussed it before, now is the time to lay out current incomes and expectations of the future. Does one of you out earn the other, work longer hours or do shift work? How does that affect your expectations? Sometimes we see one partner who feels their workload is more arduous than their partners and they expect their partner to fill the perceived gap by taking on a larger portion of the household obligations. Make sure you are honest with your partner and yourself about how you feel about the work you each do and how you will split the physical and mental load at home.
It is also important to ask one another if this plan will change if children enter the picture. Does one of you expect to be able to stay home? How will you split child rearing? Who will take time off when a child is inevitably ill? While these conversations can feel premature, communicating needs and expectations early can save hurt feelings and burnout in the future. In this case, it is true as the adage goes, an ounce of prevention is worth a pound of cure.
Debt
While many of us would never hide a major debt from our partner it is easy to avoid that conversation in the early days of a relationship. Let’s face it, it’s not a fun or exciting topic for a date night and determining when to disclose your finances can be tricky. “While it’s not sexy, a huge number of couples list money as the number one thing they argue about,” Courtney says. And the data would seem to back that up. According to the Couples and Money Survey by Orion published February 2023, 49% of people believe that financial dishonesty is a form of infidelity and 21% wish they knew more about their partners financial attitudes before committing to the relationship.
With that in mind, while planning a life together, there’s no better time to be open and honest with one another, commit to discussing finances regularly and agree to be non-judgmental with one another.
Taxes
Finally, it is important to discuss how your taxes will change once you have tied the knot. Regardless of what day you are married in the year, you will have to file as married for the entire tax year. This causes some couples to move wedding dates to gain or avoid an additional year filing jointly. Some couples find themselves paying a “marriage penalty” if the tax bracket thresholds are not double the amount allowed for single filers. This can happen to both higher and lower income households and the best way to determine how marriage will affect your taxes is to work with a CPA to determine how you will be affected and what new deductions, credits and contribution options may be available to you.
Additionally, it will be important to take the guidance of the CPA and ensure that your W4 withholding is updated to reflect the new advice. “Keep in mind that all the professional advice in the world doesn’t help if it is not implemented,” Courtney says.
Getting married is a major decision and it is easy to overlook that it is both a personal and financial commitment to your partner. Take the time to talk about the current state of your finances, your expectations and look forward to the future together often and when those talks stall or get heated, bring in a professional to help.
Depending on the situation, couples’ counselors, financial advisors and tax professionals are all wonderful resources to any couple in any stage of life who are looking to build a foundation of financial trust.
Wells Fargo Advisors Financial Network is not a legal or tax advisor. Wells Fargo Advisors Financial Network did not assist in the preparation of this report, and its accuracy and completeness are not guaranteed. The opinions expressed in this report are those of the author and are not necessarily those of Wells Fargo Advisors Financial Network or its affiliates. The material has been prepared or is distributed for information purposes and is not a solicitation or an offer to buy any security or instrument or to participate in any trading strategy. Additional information is available upon request.
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COURTNEY PHELPS is a Financial Advisor who works with a dedicated team who founded their new practice, Wyatt Wealth Management, in 2021 after serving the community for decades under Wells Fargo Advisors. After seeing the gap in financial services toward women, LGBTQ families and people of color, Courtney has dedicated herself to achieving equality in the services she provides and is a tireless advocate of LGBT causes, volunteering with the Pride Community Center in Bryan.
