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SAGE January, 2000

Money mates
Don't forget finances in the whirlwind of romance; marriage is an economic partnership, too

By Lee Matthew
In the whirlwind of romance and wedding preparations, it's easy to lose sight of the financial side of marriage.
But in my work as a financial planner, the strongest marriages I've seen are the ones in which both husband and wife see the marriage as an economic partnership.
Successfully married couples do not necessarily hold all of their assets together; in fact, many of them invest separately as well as jointly.
But what really counts is that they set goals together as economic partners. They share responsibility for achieving their goals, and they keep talking when differences arise.
Whether you're planning a Year 2000 wedding or a double-digit anniversary celebration, consider making time to sit down and talk finances. You'll want to discuss your progress toward current goals, any new or revised goals and strategies to achieve these goals.
Consider these five areas for discussion:

1. Identify your goals
Start with a general discussion of hopes, dreams and ideas.
Then you're ready to move on and pinpoint specific goals you want to achieve within a given time frame.
Start with the basics: What does your marriage mean to each of you in terms of finances? Do you really want to create an economic partnership? How do you see that working in your life?
Where do you want to be financially in five years? Ten years? Thirty years?
What about your home? Do you need to think about buying a first home together or financing the purchase of another home?
What about other major purchases, such as automobiles?
Will you or do you have children together? Are there children from previous marriages? How will the education of these children be financed?
Do you have aging relatives that will need care? Is there long-term care insurance or other resources to handle the costs of care?
What does retirement mean to you? Many people don't plan to stop working, but do plan to work at something different. Will you need to re-train for a new career in retirement? Are you thinking about buying a retirement home in another location?

2. Estimate dollars and time
Make a timeline and attach a desired date to each goal.
Do some research on costs, and estimate how much money you will need to achieve each of your goals.
Then project how much you will need to save and invest to help build toward that nest egg by the assigned date.
For example, let's say you want to retire with a $40,000 annual income by the year 2020.
What will you need to set aside today and every month for the next 20 years to help achieve this goal? How will you do it? Will you invest separately, together or both? What about tax-deferred company retirement plans? Will there be other sources of income in retirement?
If you're not sure how to do projections, or how or where to invest, see a reputable financial planner.

3. Make priorities
Chances are you won't be able to achieve all your goals without setting priorities and making some adjustments.
You may need to make changes to your cash flow: For example, you may settle for a smaller house and mortgage payment today in order to set aside more for retirement.
Or you may need to revise some of your goals: For example, an Ivy League education for your child might be desirable, but perhaps not necessary.
This is when you'll draw on the essentials of a strong economic partnership -- the ability to discuss openly, the skills to negotiate fairly and the willingness to find common ground among differences.

4. Invest together
There are benefits to investing as part of an economic partnership. While two certainly can't live as cheaply as one, if you're both earning an income you may be able to accumulate assets more quickly than you could on your own, moving more quickly toward your goals.
(Marriage also offers estate planning tools that may allow you effectively to double the amount you can leave tax-free to your heirs; see your financial adviser.)
As women, the reality is that we simply can't afford not to be part of the decision-making process.
Statistics show that 90 percent of women will be making financial decisions on their own at some point in their lives, whether through widowhood or divorce.
So, it's essential that you stay informed and participate in decisions as you go forward in the marriage.

5. Consider your safety net
If reaching your financial goals depends on either or both of your earning an income over the next few decades, think about the consequences if one of you dies or becomes disabled.
Would your financial plan fall apart if either of your incomes disappeared?
If you have children, or if one spouse does not earn an income, or if you have a significant mortgage or other debt, you may want to think about a life insurance nest egg to generate enough income to replace the working spouse's salary.
Alternatively, if one of you becomes injured or ill and cannot work, you might need disability insurance to provide replacement income.