In theory, you share everything in marriage, but in practice, more and more couples are talking less and less about their finances — a dangerous trend — as money is a leading causes of marital conflict and divorce. To help start the dialogue, "Good Morning America" financial contributor Mellody Hobson shares the top five financial issues that married couples need to be able to answer about each other.
How can you be sure exactly what your income is in order to talk with your spouse?
You would think that "How much money does your spouse make?" would be an easy question to answer — but think again. Half of the couples in a 2003 survey came up with disparate answers to questions about income and net worth. Why is it important to know this information? Because in order to figure out how much you can spend and more importantly, save, you need to know how much money is coming in. At the end of each year, most employers provide employees with updated salary information for the coming year, as well as any upcoming bonuses to be paid out. Then, just a month or so later — at the beginning of each year — you should receive a W-2 from your employer detailing your total compensation from the previous year for tax purposes. Use this information as a prompt to sit down together and discuss your collective income and how you plan to budget for the coming year.
What do you need to know about your spouse's debt?
Most couples think they know everything important about their partner — shoe size, favorite food, childhood pet, etc. But, do you know how much money your beloved owes? If you don't, you better find out quick because like it or not, it could impact you. In most cases, you are not responsible for the debt your spouse comes into the marriage with, unless of course, you add your name onto the various accounts. However, any debt wracked up during the course of your marriage on joint accounts is the responsibility of BOTH of you to repay. And, if you live in a community property state — it is always your joint responsibility, regardless of whether you have joint accounts. So even if you have not combined your finances, you need to be fully aware of all existing debt between the two of you because it will effect other joint financial goals, such as buying a house or a car, and even when you can retire. In addition to knowing the amount, you need to agree about how and when you are going to pay it off.
How much do you need to know about shopping habits?
While you do not need to share information about each and every dollar spent, there needs to be some overarching agreement about how your money will be spent and allocated to reach your joint financial goals. And, you are in dangerous territory if you are regularly hiding your spending habits from your spouse or believe that your partner is hiding something from you. Unfortunately, spending in secret is not an uncommon practice, a recent study by GMAC found that one-third of surveyed spouses admitted to hiding at least one purchase from their partner. That said, spending habits need to be layered in with understanding the full picture of your spouse's income and debt at the end of each month, you both need to understand how much is coming in, what is going out and what is being saved.
What do you need to know about your spouse concerning retirement?