Financial Conversations To Have Before Marriage

As Frank Sinatra sings about love and marriage, “you can’t have one without the other.” These days, however, it’s important to also add “make sure you’re on the same page about finances before getting hitched” to the mix. Sure, it’s not the most romantic of topics, but having an open and honest dialogue about money matters before the big day can go a long way in building a successful marriage.

Financial conversations to have before marriage

And money is certainly at the top of mind for coupled-up Canadians. According to RBC’s Love, Money & Marriage Poll from the summer of 2021, 88% of respondents said: “having similar financial goals and habits and also being aligned on how to spend and save money were deemed to be important for a healthy long-term relationship.”

At the same time, 32% of respondents found it hard to talk about finances with their partners. 32% were also not comfortable discussing each other’s current financial situations. To top it all off, 47% admitted that money is one of the biggest stressors in their relationship. 

Planning a life with a whole other person is a big step. Absolutely not one to be taken lightly. Money management is a big topic that can get very emotional, and come with a lot of nuances and, to be frank, baggage. Making the time to discuss these is crucial to setting up a solid foundation for married life.

One more thing before we dive in: it should also be noted that many couples choose to remain as common-law partners or to forego marriage. This is a very common choice. The following conversations are just as important for any serious relationship, especially if you’re living together already or are planning on moving in together.

*cue the wedding march* Let’s get started!

What does the average wedding cost in Canada?

COVID-19 ushered in a period of micro weddings, where only close family and friends would gather in a backyard or park for a scale-back celebration. But aside from this period, do you have a guess of what the average wedding costs in Canada?

Estimates by MoneySense put the number between $22,000 and $30,000. That figure aligns with the results of a survey by WeddingWire, which found the average cost in Canada is $29,450. Of course, many weddings are more simple — think a city hall ceremony with a restaurant party room reception. But when you look at all of the traditional components of a wedding (dress, flowers, food, suits, rings, cake, etc), it really can (and frequently does) add up. 

Related Reading: Combined Federal and Provincial Tax Rates

Wedding finances: Paying for the big day

Conversations with your partner about money in marriage shouldn’t just centre on what happens after ‘I do.’ Knowing where you both stand with respect to paying for the actual wedding celebration is a crucial discussion.

The aforementioned RBC poll found that wedding finances are, probably quite unsurprisingly, a not-insignificant source of stress. They found that 35% of respondents described planning wedding finances as stressful. When one partner was calling the shots? That percentage rose to 50%!

The biggest thing to remember when it comes to planning and financing a wedding is to keep the big picture in mind. Yes, you want a beautiful celebration that reflects the love between you and your partner. But…do you want to start your life together in debt? Kicking things down the road will limit what you can do, with respect to big expenses. For example, paying off wedding debt will likely delay saving for a house downpayment or saving for retirement. In a similar vein, if one or both sets of parents is contributing money to the celebration, make sure they aren’t drawing from their future retirement savings.

Much like when planning a home renovation, it’s easy to get swept up in Pinterest or Instagram-worthy details and flourishes. Focus on what you and your partner really want, and set both expectations and limits — à la Monica and Chandler from ‘Friends.’ Do you have a specific priority like high-end food, a designer dress, or a special venue? Try to save as much as you can ahead of time, with this goal in mind. Finally, give yourself a long planning runway.

Related Reading: What is my RRSP Contribution Limit?

How do you prepare financially for marriage?

If you’re getting married and you’re 30+ (or with a well-established career/savings), you’re used to handling your financial affairs. As we’ll discuss below, it’s wise to take stock of your assets/debts before marriage. Knowing where you are financially can help you better prepare for sharing a life with a spouse.

Is it financially beneficial to get married?

We have to talk about the tax benefits woven into marriage.

The first thing you should know is that in Canada, spouses don’t file taxes together. That said, you must include your spouse’s name on your individual tax return. Marriage doesn’t change your tax rate, but tax benefits will change how much you’ll get back. Keep in mind that if one spouse earns more than the other, they should be the one to maximize any deductions to help reduce their high-rate taxes.

One tax-related benefit of marriage is spousal transfers. This means that if you aren’t claiming certain non-refundable tax credits, you can transfer them to your spouse to help increase their refund. These include the spouse or common-law partner amount and non-refundable credits like caregiver amounts, disability amounts, medical expenses, charitable donations, and tuition amounts.

Other financial benefits of marriage include spousal RRSPs (help your spouse save for retirement) and the first-time Home Buyers’ Plan (you can double the amount you’ll receive if you’re both first-time homebuyers).

Remember: your accountant or tax preparation software will help guide you through your tax return, making sure you’ve maximized what you can.

How can I protect my money before marriage?

As mentioned, people are now getting married well into their thirties, with a decade of working, saving, and/or investing under their belts. You want to protect your assets! It might feel incredibly negative, but some sort of trust, will, or prenuptial agreement can give you some peace of mind.

Related Reading: The Art of Having Meaningful Online Client Conversations

Five money conversations to have before marriage

These conversations are certainly not the be-all-end-all of pre-marital money talks! There are lots of avenues you can explore, but use these as a jumping-off point. Set aside the time (i.e. don’t spring this on your partner), get comfortable, turn off any distractions like phones or the tv, and allow for the discussion to follow a natural course. Be sure not to rush it. Don’t be afraid to ask questions, either! And above all be honest when laying your cards on the table, and be respectful of the fact that your partner might have different answers from you.

1. What are your financial values?

Are you a spender or saver? What type of investor are you, if you are even investing at all? Do you have a relationship with a trusted financial advisor, or have you been managing your finances solo? How would you react in certain financial situations (eg. loss of income, a family member asking for financial help, unexpected bills or charges, etc). Being transparent about how you see money and manage your own finances is key.

As an add-on to this, talk about finances from the perspective of your childhood. What are your money scripts? What financial behaviours did you learn from watching your parents? Do you come from a well-off family or were there significant periods of struggle growing up? Children also pick up on a lot more than we know, so where we come from will absolutely inform our present and future, money-wise.

2. What is your current financial status?

Perhaps the biggest question under this banner: talking about any debts you have, what kind are they (eg. credit card, student loan debt, etc), their balance/interest rate, and how you’re working on repayment. Credit history/score can also be part of this discussion thread. On a related note, while not pleasant, bring up any past money issues like bankruptcies or collections issues.

Are you financially helping a parent, sibling, or another family member? Have you been investing either self-directed or with the help of an advisor? What if you both own property? These all need to be brought up.

As we suggested above, determine your net worth, and make a list of all your assets and debts to review with your partner.

3. What are your money goals?

Are you a ‘living in the suburbs with a van full of children” type of person or a “low-key apartment renter with an active social life in the city” type? Maybe some sort of combination of both? In order to know if you’re on the same financial page, you have to talk about what you actually want, be it a home, a condo, children — or even less domestically-minded goals like owning a business, extensive travel, or furthering your education. Try writing these goals down and comparing notes.

One thing everyone wants is to be able to retire comfortably. Sure, it seems so far away, but be sure to also talk about your retirement goals. After all, the sooner you start saving for retirement, the better.

4. How will we combine our money in marriage?

Some couples opt to keep everything separate, while others have decided that joining their money in marriage works best for them. What are each other’s expectations? How will household expenses be divvied up in a fair way? Will one partner take more of a lead in managing these? Is one partner going to file both of your tax returns?

You might feel like this is too specific to talk about before you’ve even walked down the aisle. But having a plan for how you’ll handle everyday money management can help you settle in and enjoy the post-wedding period.

5. What’s our plan for building up our savings?

A percentage per paycheck is probably the most practical way of starting to build up a shared nest egg. If neither partner has any debts, your first step should be saving up an emergency fund of at least 3 months’ salary. Next, think long-term, setting up a savings account with the goal of creating a stable, more certain future for your finances in your marriage.

Related Reading: How to Invest $1000, $10,000 or $100,000

Should you combine our money in marriage?

As we mentioned above, whether or not to combine finances after marriage is up to each couple. It’ll be a great option for some, and keeping separate accounts works better for others. The important thing to remember is that there is no right or wrong answer.

How to combine money in marriage

There are a few ways you can go about doing this, especially with respect to household expenses. One option has both partners contributing an amount proportional to income. A similar route would be dividing specific expenses (eg. cable/internet, weekly groceries, phone bill, etc) in a fair way.

Another option is for both parties to contribute the same set amount every month toward expenses. Leftover money would go to savings. A final option would be to fully combine accounts and cards — setting aside savings, investing, and paying bills from the pot.

Tip: Figure out a price point when a purchase should be discussed with your partner. For example, any purchase over $150. Picking up a plant for your living room is one thing, but buying a new couch or television should be done in consultation with your spouse.

If you’re not sure how best to approach finances in your marriage after all the wedding excitement starts to fade, connect with a financial advisor. They can help guide you in the right direction.

Budgeting as a couple

It’s one thing to regularly budget and track spending for yourself when you’re single. When you’re starting to combine finances in marriage, however, you’re going to need to re-configure. Establishing a budget can also help you figure out how best to divide household expenses. Break out some spreadsheets or use your favourite budgeting app to start.

Investing as a couple

Here’s where it might be particularly wise to consult an advisor to help you come up with an investment plan that works for both of you, your spouse, and your goals. A financial professional will be able to tell you the best products and strategies to build household wealth. Plus, you have the benefit of a trusted, independent third party.

If both of you are avid investors, a professional will be able to marry (pun, intended) your portfolios to make them work in tandem for the best possible outcomes.

Partners that have the absolutely exact same money mindset as each other? Probably not as common as you’d think. But prioritizing a discussion (or a few) can help you better plan as a couple and build a life together. And don’t think this is just a one-and-done situation! Goals and opinions can change. Check in with each other around big life events — moving, buying a house, renovating, having a child, retirement planning — and sit down for a discussion. It’ll help you stay on the same page, or figure out what you need to do to keep moving forward.

Read More: Common Law vs Marriage Canada: What are the financial implications?

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