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Prenuptial Agreements May Not Be Necessary, But Prenuptial Financial Discussions Are

What should young couples discuss about finances before they get married?

According to a 2012 study published in Family Relations, arguments about money are the most common predictor of divorce. Nonetheless, finances are at the bottom of the list of topics most young couples talk about. With the threat of divorce so prominent in modern society, is seems only reasonable that engaged couples should spend some time discussing their attitudes about, and expectations of, financial matters. Following are some themes to direct your discussions and hopefully put you both in a better place relative to the economic aspects of marriage.

[1] Individual Perspectives on Money

Each member of the couple has been raised in a different family and these differences have to be discussed in order for each to understand the other's perspective. It is important to know not only the level of wealth or poverty your intended grew up with, but the behavior surrounding that environment. Was the family prone to strict spending practices or did one member frequently splurge while the other scrimped? What were the family's priorities in terms of spending -- home furnishings? clothing? cars? education? vacations? Did your fiancé(e)'s parents always consider "buying the best" to be a good investment or were they bargain hunters?

[2] Put Your Financial Cards on the Table

Unless both partners understand and communicate their individual financial situations, they will not be able to make reasonable decisions as a couple. They have to know one another's earnings, student loan debt, mortgage or rent, savings and credit score. They also have to fess up to any history of binge-spending, stinginess, or a tendency to lend or borrow.

[3] Show Each Other the Money

Since you are going to be married and, presumably, share a budget, you should show your partner an outline of your income and your expenses. It may be that you are already aware of one another's spending and saving habits, but there is no substitute to actually seeing the numbers in black and white. You may be amazed to find out that you spend more on entertainment than groceries or that your partner saves half of his or her salary. Revelations of this kind should be prerequisites of marriage so they don't become areas of contention and so that you can combine your budgets into a plan that suits you both.

[4] Look to the Future

While no one has a crystal ball and unforeseen occurrences are to be expected, you should discuss very basic futures plans, such as whether you want to live in a city, suburban or rural community and whether you want to have children. Don't make the assumption that your spouse to be shares your desire of a large family unless you have discussed the matter. Also, you should both be aware that the U.S. Dept. of Agriculture estimates the cost of rearing one child at more than $245,000.

[5] Make Some Money Management Decisions

It is important to make a decision about whether you will keep separate bank accounts in addition to contributing to a joint account. You should also discuss who will pay the bills. Will one partner pay the rent or mortgage and the other pay for other expenses? Will the money simply be pooled? How much will each spouse require for day-to-day living expenses? How big must a purchase be for both parties to agree that it is necessary?

[6] The Uncomfortable Prenuptial Agreement

While not every couple signs a prenuptial agreement, it may show a certain amount of maturity to do so, particularly if the two members of the couple come to the marriage with widely varying assets, or if this is not a first marriage and there are stepchildren to be considered.

It is extremely helpful to be guided through premarital financial discussions by an experienced estate planning attorney who will know which questions to ask and whether you have need for legal documentation. Discussions about financial matters are not usually easy, but they are considerably easier before the wedding then after years of marriage. It is astonishing how quickly bills and spending habits can lead to marital discord. You may be pleased, surprised, or dismayed by the results of a premarital financial discussion, but it's much better that these feelings be explored before, rather than after, the wedding vows are taken.