Tess Vigeland: OK, so who’s going to a wedding this weekend? Probably half of you. ‘Tis the season for matrimony, after all. And we hope all the brides and grooms-to-be out there have had the money talk. For those who haven’t, Lisa Gerstner of Kiplinger’s joins us. Her article “Yours, Mine and Our Accounts” is in the June issue. Thanks for being here.
Lisa Gerstner: Hi. Thank you.
Vigeland: So finances are a decidedly unromantic topic, but how do you start that conversation with your partner?
Gerstner: A good way to start that conversation is to just set aside some time to sit down and talk about money. And do it when you know that you will both feel fairly relaxed — maybe after dinner, after you’ve had something to eat. And tell your partner money is a common cause of fights, even divorce in relationships. So it’s really crucial to talk early and frequently about your finances.
Vigeland: How early are we talking about? I mean, is this a conversation that needs to come up before a proposal, after a proposal, a couple of days before the wedding?
Gerstner: Definitely if there’s a proposal, that’s when you should start thinking about it. Maybe before that if you know that you’re serious about each other and you know that it’s going to go in that direction. Or even if you’re going to live together, you have to figure out how you’re going to handle these things and make sure you don’t get into fights about it.
Vigeland: What if it’s something that you’ve really never addressed ever? I mean, you haven’t even bothered with figuring out who’s going to pay for a date, it just kind of happens. I mean, money is just not something that we talk about. We just hate talking about it, especially with someone that you’re dating.
Gerstner: It very well could be an uncomfortable conversation. Maybe one of you has a really low credit score and the other one doesn’t. Maybe one of you has a mountain of debt to pay off and the other one is really strict about paying off your card each month. You can meet in the middle, it’s possible even for people with very different personalities to meet.
Vigeland: Well, you mention the credit score. How do you protect yourself from a partner’s bad credit score? What kind of implications are there for you if the other person in the relationship has a bad one?
Gerstner: Well the first thing to know is that any credit that is all your own is only your own and it won’t affect your partner unless you put your name on their accounts and vice versa. The other thing that is important is that if you do sign up with a joint credit card or something like that, then yes, your score could be affected. So approach it very cautiously. Also, if you want to get a mortgage together, if one person has a lower score that will affect the interest rate — your rate will be higher. So in some cases it might actually be better for one person to apply, depending on the situation.
Vigeland: Let’s get down to brass tacks of merging finances once you are married and the discussion that takes place about that. We’ve explored pretty much every option on this program. You have the “yours, mine and ours” or you have the “joint” or you have some hybrid of them. What’s your recommendation?
Gerstner: Well, it’s really about the conversation you have. There’s not a magic formula. It’s really all about what you want to do and what works best for you as a couple. And one way to do that is to stay completely separate. If you’re feeling really independent and you don’t want your money to be together — or if it’s for legal reasons, whatever it may be, and you’ve had a lot of conversations about it and feel good about that — maybe you can do it that way. For other couples, maybe they mix it up. One married couple I talked to actually uses a joint checking account and a joint credit card for shared expenses. And that includes the mortgage, the utility bills, dinners they may go out together for. And in their view, a fair way to split those joint expenses is to base it on their salaries. So, for example, if she makes 60 percent of the income, she pays 60 percent of the bills. And they think that works really well for them.
Vigeland: Lisa Gerstner is a reporter for Kiplinger’s Personal Finance Magazine. Thanks so much.
Gerstner: Thank you.