While many plan their wedding in great detail, changes to a couple’s personal finances after the big day often get far less attention. Whether you’re getting married or considering moving in together, it’s important to have a frank discussion about finances before you take the plunge.

Talking about money isn’t always easy and it’s not romantic. A starting point might be to identify your “money personality”.

Who are you when it comes to money?

Perhaps the springboard for having the “big talk” about money is identifying your philosophies on handling finances. Which personality type do you identify with?

Super-Saver	I like saving every penny I earn. I avoid any spending unless absolutely necessary.
Cautious Spender	I’m careful with my money and spend it prudently. I put needs over wants and save as much as possible.
Carefree Spender	I believe money is meant for spending and enjoying. I have a hard time saving money and meeting my long-term financial goals.
Avoider	I don’t pay attention to how much money I have, owe, or spend. I have a laissez-faire attitude towards my finances. I prefer someone else to take care of them for me.

Discussing your differences in advance with your partner may prevent misunderstandings and stress down the road, especially if you have opposing money personalities. This is especially important as two-thirds of those who plan to marry or live common-law bring debt with them into their union.

How do you “marry” your money personalities?

You can foster financial harmony by talking openly before you move in together. It’s important for both of you to agree on an approach for managing your finances. Consider these three options.

1. Sharing everything is most useful if you and your partner have the same money personalities. It allows you to simplify your finances by having a joint bank account and all your money deposited into it. Sharing everything may be more problematic if you have different money personalities.
2. With the expenses-only approach, together you create a common plan for all household expenses, as well as for activities you enjoy as a couple, like entertainment or joint travel. Then, you both fund a shared “joint account” with a set amount of regular weekly or monthly contributions; all household and shared expenses are paid from this account. The expenses-only method is ideal for couples who have differing money personalities, as it accommodates shared expenses as a couple while still allowing each of you to spend independently without “checking-in.”
3. You may decide to assign expenses to each of you. For example, your partner could be responsible for all household expenses (like mortgage payments, utilities, repairs) while you pay for food, entertainment and travel. This is more common in second marriages or relationships particularly where one partner either earns significantly more than the other or has a much higher net worth coming into the relationship. You may also consider living off of one income and putting aside the other.

Did you know? A CIBC poll1 found that only 35% of couples who were planning to get married or live common law within the following 24 months had actually had a serious talk about money; keep in mind, virtually everyone surveyed admitted it’s important to discuss how to plan and manage their finances together as a couple before they commit to one another.

Don’t forget to plan for savings!

No matter which approach you choose, it’s important to discuss how you’re going to save for future goals, like buying a vacation property, starting a family or saving for retirement. You also need to plan how you’ll save, whether that’s using a joint account or saving on your own.

Tax and estate planning considerations

Once you move in together, your tax and estate planning needs become more important. For instance, tax planning may involve using spousal or common-law partner RRSPs to save for retirement to achieve post-retirement income splitting benefits. You can also start sharing certain tax credits (donations, medical, tuition fees, etc.) when filing tax returns. Be sure to speak to your lawyer about creating or updating powers of attorney and wills. Your estate beneficiaries should be coordinated with beneficiary designations on your RRSP, RRIF and TFSA. You may also want to explore disability and life insurance, which can be important tools to protect your financial partnership.

Connect with us if you are heading into a long-term relationship. We can help coach you along the path to financial health and harmony before your big day arrives.

¹ 2016 CIBC Couple Finances Poll (August 2016).

Clients are advised to seek advice regarding their particular circumstances from their personal tax and legal advisors.