Apologies for the hiatus. I was in Hawaii for CME and play. I also got engaged! The above quote is what M said to me (after he promised some other important things like love and happiness).
There are 3 major things in life to insure against – death, disability, and divorce a.k.a. (term) life insurance, disability insurance, and the pre-nuptial agreement AND making sure you and your partner are compatible, especially when it comes to money. Everyone agrees on the first two, but so many neglect the last. People simply think they won’t get divorced – it’s everyone else. Unfortunately, statistics show otherwise.
The internet has several articles on the leading causes of divorce, but let’s look at this one from the Huffington Post. Finances is #7, but #4 “Not having a shared vision of success” includes financial goals too. In any case, I think everyone can agree that being on the same page money-wise is an area that couples need to agree on.
Love feels great, but ultimately a successful marriage is based on much more than that. The NY Times’ questions to ask before marrying has finances as the second question:
“Do we have a clear idea of each other’s financial obligations and goals, and do our ideas about spending and saving mesh?”
Around the third month of dating M I asked him how much money he had saved for retirement and what debt he had. I divulged mine as well. We talked about our shared goals like to work in jobs we enjoy, take two big trips a year, live partially abroad in the future, etc. In fact, we drew up an IPS or Investment Policy Statement. OK, I drafted it and he approved it :).
And, I’ll let you take a look at our first draft from a few months ago as an example. This document was the culmination of M and I discussing our goals as a couple. We have also discussed how we feel about financial obligations to our parents should that arise.
We recently hired a financial advisor in prep for combining our finances. I realize most of the finance blogs out there promote DIY and I was more than comfortable doing that for myself. I felt more was at stake with managing our finances. I’m also no spring chicken so we don’t have much wiggle room for big mistakes – we have ambitious financial goals.
By the way, we did all of the questions in that NY Times article.
And finally, we have discussed the terms of a pre-nuptial agreement, stay tuned for that.
What do you think? How financially compatible are you with your partner? What questions did you wish you asked?