Couples sometimes wait until they are married to have important talks related to finances, but these types of discussions need to be had at an earlier stage in a relationship. Marriages can fail because of financial difficulties and disagreements about money, so it is important to talk about these things before a relationship gets too serious. Without open and honest discussions related to finances, couples can damage their relationships due to differences in the ways each individual handles money, their different attitudes toward spending and saving, and their general financial habits. The following topics need to be discussed in relationships. The sooner couples have this talk, the better their chances of working out differences that relate to money management before it is too late.

Discuss each person’s financial histories

Asking a partner about his or her financial history can be a difficult subject to casually bring up in conversation, but having the discussion despite that discomfort can solve many future problems. Having lots of credit card debt or a low credit score can help couples understand the financial position they would find themselves in if they were to get married. It is much better to have this information in advance. Debts can be paid off, and credit scores can improve over time. However, the strain financial problems can put on a relationship can do irreparable damage.

Be open and honest

Each person needs to be honest about debts, credit scores, and general philosophies regarding saving and spending. These discussions should also include information about future financial plans and goals. Based on these types of talks, a couple is more prepared for the financial realities they are likely to face in the future. A couple can also use these conversations to create a plan for joint spending and to prepare for upcoming expenses like weddings or mortgages.

Clearly define financial goals

Talking about financial goals early on gives couples time to plan the best strategies for achieving their goals. If credit scores need to be improved, if debts need to be paid down, or if more credit is needed to build a solid rating, those things can be addressed. Waiting too long can mean having to put off purchases like homes, cars or other things that can greatly affect a couple’s quality of life. If one person in a relationship has a very different idea about how money should be spent, these discussions can lead to compromise. Alternatively, they can also help a couple understand where their philosophies differ, and alert them to potential deal-breakers early on.

Look at each individual’s credit scores

When people get married, they suddenly begin to share lots of things they did not previously share. A credit score is not one of those things. Each person in a union still has a personal credit score, and each of those scores matter. After marriage, joint accounts may help the person with the lowest score obtain credit that the person would not have qualified for on their own. Joint accounts, however, must be handled carefully to avoid damaging both partners’ credit scores. When joint accounts are opened, that is reflected on each individual’s credit score, but missed or late payments will also appear on each person’s credit report. These types of oversights can then damage both individual credit scores. Sitting down together and looking at credit reports might not sound like a romantic evening, but this information can help a couple determine a long-term strategy for handling finances.

Disclose Debt

People sometimes think that hiding debt from a significant other is a good idea. However, this can be damaging to not only a relationship, but also to both partners’ financial future. Because credit-to-debt ratios are factored in when determining a person’s overall credit score, secret debt can damage both individuals’ credit. If a partner takes on debt without having an accurate idea of the overall amount already owed by the other person, this can push the debt-to-credit ratio high enough to increase interest rates or cause credit to be denied. Situations like this can be avoided by being open and honest about debt. That individual will not be nearly as disappointed to hear that information coming from a significant other as they would be if they had to learn it from a banker while applying for a loan and being denied.

Talk about buying a home

When couples apply for loans, lenders check each person’s score and use the lowest one. This means that planning for a home purchase needs to be discussed early on in a relationship so that both individuals can work toward financial health. Wise homeowners put as much down as they can in order to get a lower interest rate. They also wait until they can afford home improvements and furniture. Put down at least 20% on a house in order to avoid private mortgage insurance, and wait until each person has at least a credit score of 720 before applying for loans.

Create a financial plan together

A couple that begins planning early for big expenses like homes and weddings can save lots of money in the long run by saving up for these things in advance. This can mean paying little or no interest on large purchases, and it can mean getting practice working together financially to achieve goals. Having a financial plan is important, and it is especially important for couples. They need to be able to work together to achieve financial goals if they plan to save up for retirement together. If one person is not good at sticking to a spending plan, this is good information to know early on in a relationship. It may not be the end for the couple, but it could prevent one person from being tasked with financial responsibility that individual can’t handle.

Joint bank accounts versus individual bank accounts

Be sure to also talk about bank accounts. Not all couples opt to have a single joint bank account. Many couples choose to have a joint account that covers shared expenses, but also main separate accounts for individual spending. This helps both individuals maintain solid credit ratings, while also allowing them to easily share the costs of certain expenses they are both responsible for paying.

Talking about finances is important in a relationship. Couples who learn how to discuss these topics openly and honestly fare better than couples who make money talks off-limits before marriage. Finances affect lots of other aspects of life, and couples who plan their financial strategies early can avoid certain money-related relationship problems in the future. This often neglected conversation is one that all couples need to have.

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