Financial Decisions to Make Before Marriage

Well, hello and welcome in to Mr. Stillman's Opus.

Glad to have you on the show as we dive into the first of three parts. John, we're going to break some things up and talk a little bit about marriage. And you probably ask, well, why would you break up marriage in three parts?

Well, there's some other categories that fall within that, right? Re-marriage and divorce, three stages of relationships that many people go through. Not necessarily in that order, usually marriage, divorce, re-marriage, but to each his own.

Yeah, very good. We're going to talk about really things you'd be thinking about, right? Some practical tips and some guidance financially for you if you are getting prepared to be married or remarried or if you are going through the divorce, because there are some really big financial considerations. And as we all know, John, right, money is often the root of many disagreements in marriage.

Boy, is that ever true. Speaking of marriage and re-marriage, I read a couple of years ago, or I should say I listened to a couple of years ago, Matthew McConaughey's book. And it's a great listen because he narrates it himself, which of course makes it awesome. But he talked about how his parents had gotten divorced and remarried, I think three, maybe four times to each other. So you can only imagine what that relationship was like. Yeah.

And I guess, I don't know if you have to consider these things for each one of those remarriages, if it's the same person, do you? How does that work? Probably a unique situation we don't have to cover. You haven't come across that yet?

Not yet. Okay. Fair enough. All right. Well, we're going to have a good show. I do hope to someday, but I haven't yet. Well, you never know.

I'm sure it's only a matter of time. All right. Well, let's start off. We'll spend this episode then on focusing on marriage and then do part two on remarriage and then finish that up with a third part on divorce. So make sure you subscribe to the show. Make sure you don't miss out on this full conversation.

If you know someone that's going through this, right, a perfect opportunity to send them this episode, point them to it and say, hey, have a listen. Here's some things to be considering because hopefully this will be some practical guidance for you if you are going through either one of these life events. So with marriage, Jon, how long have you been married now? A little over 11 years. Wait, let me think.

12, 23. Yes, just over 11 years. Seven years. Okay. I'm coming up on seven years. So I don't have as much knowledge as you do, but I feel like I've come through this and figured some of these things out.

So I'm going to try that. You're older than me. You were a late bloomer.

I was a late bloomer. I was indeed, which, you know, I'm happy about. But pros and cons is all that. But that's a totally different discussion. Right. So let's start with marriage and combining finances.

The first, I guess the first thing you're looking at here, maybe these aren't in necessarily the priority order. Right. But combining finance is the first thing you have to have a discussion about.

Right. How are you going to combine those bank accounts? Should you have joint bank accounts? Should you keep it separate? I know everybody has personal preferences, Jon, but kind of where do you lean in on this?

Yeah. So it's definitely something we have to talk about. And by we, I mean, the two of you before you get married need to talk about. So I think a lot of people just assume that it's going to be one way or the other and their new spouse or spouse to be doesn't have that same assumption, which, you know, right off the bat, suddenly we have some communication problems there. Very rarely would I ever be excited about people maintaining separate accounts once they get married.

Now, there are some nuances there that we can talk about later just in terms of how you structurally set things up. But, you know, generally speaking, I would say if you're getting married, you're not only combining your lives like you are combining your finances. And the idea of having them separate just it has never made sense to me that people would keep completely separate financial lives. I mean, I know people we have friends who have their separate accounts, they each have their incomes, they have their bank accounts, and then they Venmo each other back and forth every month for household bills. Like she'll pay the mortgage and he'll Venmo her for half of it. And, you know, she'll buy groceries and or he'll buy groceries and she'll Venmo him. It doesn't make any sense to me.

But there are people that do it. So you you clearly weigh in. If somebody asks for your advice, hey, John, what do you think we should do? We're kind of open to whatever the options are. You would say absolutely joint bank accounts just make things easier to manage. Now, yes, but I can understand how maybe it's going to be tough to like come down, come back from the honeymoon and immediately, boom, joint bank accounts and we're rolling.

If you have to work into it, if you know, there's just things mechanically you have to work out to get to that point. Okay. But I wouldn't go into it with the idea. Well, we're just going to keep our separate financial lives forever.

Right? Well, I'll let you evaluate my setup. We have a joint account that we put most of our money into. And then we have our own kind of savings account, separate accounts. We kind of have our own ability to spend a little bit extra money on the side, however we see fit. So that kind of joint accounts where all the spending comes from for bills and all that and make sure everything's covered. And then we have a little separate money that we can dabble with how we want.

Yeah. So let's talk about that in terms of structure of how you might set things up, really in the context of your own individual spending money or your own personal spending you might call it. So a few ways you can do it. And I do think it's important that in your household budget, you have a personal spending category for each spouse. You can't talk about every single expense, right? So there's going to be some things that is her spending and some stuff that's my spending. Well, we all have it in the joint account.

It's all happening in one place. But in the budget, there's a different line item, Molly spending, John spending and whatever transaction needs to go in each category, it'll get put in that category. And then you can keep track of where each person's personal spending budget is.

If the way to do that, if it's easier for you to do it like you're describing Ben, where you have your joint account that most of your money goes in, and then each spouse gets a little bit of money, an allowance, essentially each month in the personal account. I think that's fine. I think that's just, I mean, it's basically the same conceptually as us doing in the budget. You're just doing it in separate bank accounts to keep track of it that way. But I think that's fine. It's just a matter of, you know, everybody being on the same page of how we're going to do it.

Now, let me ask you this. Every month, do you each get the same amount deposited into your personal account? How do you do that? Yeah, it's basically this percentage of earnings, essentially. So, you know, I might put 80% of my check into saving our joint account and 80% of everything I earn into that account and then just keep that separate money on the side. So it's not kind of a, hey, put it all in and then take out a share. It's kind of, hey, put in X amount every month and then, you know, the rest is yours to spend as you choose. Yep. So that's another thing to communicate about, right? Is it that we're each going to have our incomes and we're each going to keep a percentage of our income in our personal account for our personal spending? Or are we each going to keep the same dollar amount in our personal spending account and the rest will be combined? I don't know that there's a right or wrong answer necessarily, but it's just, it's something to talk about and make sure everybody's on the same page. Right.

Okay. And another thing to think about is, all right, well, how do we define what is a personal spending expenditure and what is a joint household expense? So the way we do it is essentially, you know, if we're going out to eat as a family or if Molly and I are going out to eat together, we have a restaurant category in the budget that that's going to get categorized under. If Molly goes out to eat with a friend or I go out to eat by myself, that's not in the restaurant category, that's in our personal spending. So just because it's a restaurant doesn't mean it automatically goes in the restaurant spending. If we're buying gifts for each other, that's going to come from the personal spending. If she's, you know, buying basic toiletries, that's going to go in the household expenses item. But if she's subscribing to her perfume of the month club, that's going to go in her personal spending.

So you know, you just have to set the rules and then go buy them. Does she subscribe to that? Is that an actual subscription? It is indeed. Yes. Very cool.

Learn something new about Molly today. I like that. Yeah. All right. I probably got the name of it wrong, but yes, it's basically a perfume of the month. Smell of the month.

Scent of the month, I think it's called. All right. So Combining Finances, obviously, this is a pretty detailed conversation and one obviously just listening to us go back and forth a little bit.

There's a lot to think through. So being direct with that takes us to our next point. That's just communication, right? So not only just communicating about these type of things, but how do you actually communicate about money?

Yep. So a lot of people keep the separate accounts because they say, well, it keeps us from fighting about money. And so that's their solution is, well, we'll just keep it separate and, you know, we'll split some bills and stuff, but then he can do what he wants and she can do what she wants and we don't ever have to communicate it, which to me is kind of like saying my car is making a really disturbing noise.

Like there's this clinging coming out of the engine. And so my solution for that is I turn the radio up so that I don't have to hear the clanging noise. Not really the way to address the problem. And so if you're fighting about money, in my mind, the solution is not, okay, well, let's just find a way that we never have to communicate about it. No, the way to solve the problem is let's find a healthy way to talk about money and get on the same page because it's good for our marriage if we're on the same page with this. And so I don't love the idea of separate accounts because it keeps us from fighting.

That's just a band-aid on the issue that's not really fixing the problem. So yes, we have to learn how to communicate. And you know, inevitably different spouses usually come from different households where money is viewed differently. I guess I should say spouses hopefully are always coming from different households. But usually the communication in those households is different. And so people just have different conceptions of how money works and how money should be viewed. In one household it might be always a source of stress or contention. In another household money was just never an issue, never really talked about, everything was fine. You just have to understand where you're coming from, bring all that baggage, good or bad, to the table, lay it all out there, and then let's decide how are we going to move forward together as a couple with these different financial backgrounds that we have.

All right. And so the last thing I had to talk about was something we've already kind of covered, but that's personal spending. So is there anything else you'd add to what we've already said, Jon, or do you think we've kind of covered it well?

No, I think it all boils down to setting the rules, having clear expectations, and then following those rules. I mean, 10 years ago, Molly and I had to communicate a lot about money. All right, if we're going to spend this, first of all, can we spend this?

What category should it go in? All that kind of stuff. Now it's incredibly rare that we have to have any kind of discussion like that because the budget is pretty well set.

We know what's what. We each have our own personal spending. You know, quite frankly, we have more money to work with than we had 10 years ago. So the question of can we afford this is more rare, but it's more like, hey, you know, I would like to give some money to this particular cause.

What do you think would be an appropriate number or something like that? More so than, hey, I think we need a new doormat. Can we afford one? So, you know, certainly the conversations are going to change over time. But the key is understanding that you are in control of the money. You're in control of the budget. You get to set the rules. But once you've set the rules, the two of you need to work together to follow those rules and be on the same page.

I'll add one last thing here to the conversation. And that is should I guess you need to have kind of kind of falls on what we're talking about, but having a conversation about whether who's going to be who's going to manage the finances and how active both partners are going to be in terms of managing that money. Good point, because inevitably one spouse or the other is probably more wired for this than the other. And so you don't want it to be a situation where that spouse just completely handles everything and the other one is completely in the dark. Like maybe both spouses are fine with that, but you at least need the lesser involved spouse to have an idea of what's going on. So, yeah, it doesn't have to be that both spouses are involved equally and paying bills and laying out the budget and all that. Inevitably, probably somebody is going to take the lead, but let's not let it be all one and nothing from the other spouse. All right.

Very good. So part one in the books, marriage, we will go into remarriage next, John, or do you want to stay in order? Yeah, let's maybe hit remarriage on the next one. And we'll hit divorce in the episode after that. So we'll have more considerations financially for each one of these life events, but they are so important, you want to get them right and have these conversations early on.

So you're not talking about them and arguing about them later on. So make sure you subscribe to the show and John will do it again. Thank you. See you then. Carolina wealth stores doing business as a Rosewood wealth management is a registered investment advisor in the state of North Carolina. The material presented is intended to be general information and should not be construed by any consumer as the rendering of personalized investment advice.