The Experts: Getting Married? Read These Financial Tips

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What is the most important financial advice for newlyweds? The Wall Street Journal put this question to The Experts, an exclusive group of industry, academic and other thought leaders who engage in in-depth online discussions of topics from the print Report. This question relates to a recent article that discussed financial tips for couples tying the knot and formed the basis of a discussion in The Experts stream on July 10.

Carl Wiens

The Experts will discuss topics raised in this month's Investing in Funds & ETFs Report and other Wall Street Journal Reports. Find the finance Experts stream, watch recent interactive videos and explore a host of other exciting online content atWSJ.com/WealthReport.

Also be sure to watch investment adviser Tom Brakke (@researchpuzzler), blogger Mike Piper (@michaelrpiper) and University of California, Berkeley, professor Terrance Odean in an interactive video chat that aired on July 8 in which they discussed strategies for coping with market volatility.

Christian Magoon: Understand Each Other—Before A Major Decision Is Needed

Finances are often one of the most divisive areas in a couple's relationship. This is because attitudes and preferences about money are deeply personal and therefore strongly held. Newlyweds should focus on trying to understand each other's financial beliefs and experiences before the pressure of a major financial decision occurs.

Christian Magoon (@ChristianMagoon) is founder and chief executive of YieldShares, an income-focused ETF sponsor.

Manisha Thakor: Learn to Talk Money With Your Honey

My financial advice to newlyweds is…learn to "talk money with your honey." Time and again money is cited as one of the top causes of fights in relationships and causes of divorce. In my world I've observed that often time this is because financial opposites (i.e. a saver and a spender) attract. There is a body of academic work that suggests this is because there is something intoxicating about "financial otherness" in the early stages of courtship. Alas, when that initial novelty wears off, fights can begin.

A really basic way to start to get on the same page financially is to commit to sitting down at least once a year and reviewing the following pieces of financial information: (1) your income, your expenses, and the difference, which ideally is your savings, (2) your assets, your liabilities, and the difference, which is your net worth, and (3) your credit scores and credit reports—so all debt is transparent. I liken these stats to the basic blood work drawn at your annual physical. They are pieces of data that can help you see if you are on course or need to work as a team to make adjustments.

One caveat: I'm not suggesting these conversations are going to be easy. For millions of people, talking about money brings up emotions ranging from guilt to shame to embarrassment. Couples who pay attention to their financial well-being the same way they would their physical, spiritual, or intellectual well-being put themselves on a path for much lower levels of financial stress.

Manisha Thakor (@ManishaThakor) is founder and chief executive of Santa Fe, N.M.-based MoneyZen Wealth Management LLC.

Matt Hougan: Make a Vow of Frugality

You know the thought you're having now? About all the things you could have done with the money you spent on that wedding? About how much they charged for those centerpieces?

Remember that feeling when the time comes to buy a car. Skip the baby Audi, buy a six-year-old Corolla and take a great vacation/fund your retirement/save for a house instead.

Matt Hougan (@Matt_Hougan) is president of ETF analytics and global head of editorial for IndexUniverse LLC.

Terrance Odean: Start Saving

Start saving 20% of your after-tax income now. (Including 401(k) savings, contributions to a defined-benefit pension, etc.)

Terrance Odean is the Rudd Family Foundation professor and chairman of the finance group at Haas School of Business, University of California, Berkeley.

Olivia Mitchell: Build a Joint 'Financial Dream' List

Particularly since few have much money, financial disputes drive many divorces. Too many couples today begin their lives together holding seemingly overwhelming student loans, car loans, credit-card debt and more. So when the honeymoon's over, the money quarrels start: "Why did you spend so much on clothes? We're supposed to be saving for a house down payment, so why are you buying such an expensive computer? Just because I'm the homemaker, why don't I deserve some spending money of my own?"

So my advice is to spend a weekend building your "financial dream" list together. That will give you much to look forward to, after the passions cool and before the money squabbles have time to set in.

Prior to walking down the aisle, my partner and I took a couple of days to draft our financial dream plan together. How many kids did we want? How often and where would we vacation? How would we handle the fact that one of us had enough for a small down payment on our first house, and the other had no savings at all?

That was probably the most important discussion of our lives together, since we hashed out priorities and pre-settled arguments that we wouldn't have to have later.

We also decided to go the joint and separate account route: The joint account pays for most everything, including the house, cars, kids, the college fund and taxes. The joint account also contributes to our retirement accounts. Then we each get a small monthly allowance transferred into our separate accounts, which we use as we wish. Separate and joint credit cards are attached to each account.

All this seems like a lot of work, but it has helped us avoid arguing about money (for the most part!). And we're still living out the financial dream we drafted together, 31 years ago.

Olivia S. Mitchell is a professor of business economics and public policy at the Wharton School of the University of Pennsylvania, where she focuses on pensions, household finance and risk management.

Greg McBride: Save for a Rainy Day

Build an emergency savings cushion as quickly as you can. Money is the number one issue that married couples argue over, but having that rainy-day fund will give you financial peace of mind and alleviate a lot of potential stress in your marriage.

Greg McBride (@BankrateGreg) is a senior financial analyst and vice president for Bankrate.com, providing analysis and advice on personal finance.

Michelle Perry Higgins: Get On the Same Page Early

Marital bliss can be so intoxicating that it is sometimes hard to see through the fog and imagine that you could ever have financial challenges. So while you are still in that state of euphoria, it's a great time to write out a financial plan. Ideally, you should take care of this prior to the wedding or shortly thereafter. During the financial-plan review you will evaluate your budget, spending patterns, savings needs, debt, income expectations (dual or single), insurance and much more. It is critical to have this type of full disclosure occur early on and make sure you are both on the same page with regard to your new financial future.

Michelle Perry Higgins (@RetirementMPH) is a financial planner and principal at California Financial Advisors.

Rafael Pardo: Communicate Early and Often About Spending Habits

When couples marry, they often become a single economic unit, pooling their assets and income and sharing responsibility for their debts. Prior to marriage, couples may have already begun the shift from an individual financial identity to a collective financial identity. Regardless, in the spirit of Benjamin Franklin's wise observation that "an ounce of prevention is worth a pound of cure," newlyweds will increase the likelihood of marital harmony by communicating early and often about their consumption habits. When one partner's consumption preferences are not closely aligned with the other's preferences, the mismatch can negatively affect the couple's ability to achieve its financial goals. As consumption increases, the ability to save and invest decreases. If from the outset couples do not sign on to the same game plan (i.e., budget) for achieving their financial goals, they very well may encounter difficulty in buying a home, saving for retirement, saving for their children's education, and so on and so forth. And if one partner perceives the difficulty to stem from the other partner's consumption habits, disapproving and acrimonious feelings will likely follow. Newlyweds can stem such discord by the simple expedients of discussing how their spending will affect their financial goals and having that discussion inform their collective financial decision-making.

Rafael Pardo (@bankruptcyprof) is the Robert T. Thompson Professor of Law at Emory University, where he specializes in bankruptcy and commercial law.

George Papadopoulos: Get on a Healthy Financial 'Diet'

Have a financial plan in place. Max out on retirement savings; the sooner you start, the better. Have an adequate cash emergency fund and get in the habit of saving for short-term goals. Ignore advice to buy more house than you can afford. Diversify your investment portfolio with low-cost index funds and ETFs and rebalance it at regular intervals. Invest in yourself by getting more education and continuing to add to your skills. Does this sound similar to the advice given to people who want to lose weight (eat healthier, exercise more)? If it was that easy, most people's finances would not be in such a mediocre state today! For some people it makes sense to hire a good fiduciary financial adviser who will prevent them from making mistakes and keep them disciplined to follow a prescribed financial plan.

George Papadopoulos (@feeonlyplanner) is a fee-only wealth manager in Novi, Mich., serving affluent individuals and families.

Sheryl Garrett: Make a List of Lifetime Goals

Finances are often a subject that squelches any romantic conversation, however it is essential that new couples recognize that they are not only a romantic and domestic partnership, they are also a financial partnership.

I use one exercise that helps couples get to know more about one another, their individual and shared goals and their most important desires in their financial lives. I've used this exercise with couples who've been together two months to 20-plus years, and new information is always revealed. It's simple, fun and can be very enlightening.

Start by listing on a piece of paper the first 30 things that come to mind that you'd like to do, see, become or accomplish in your lifetime. This is your personal list. Have your partner do the same thing. Coming up with 30 things is not easy. It causes people to really dig deep, far beyond the stereotypical financial-planning goals. For example, my list includes visiting all of the parks in the National Park System and learning to speak conversational Chinese. Once you've made your list of 30 things, next place an A, B or C next to that item. Place an A next to the things that you "Must Do", a B next to the things you'd "Love to Do" and a C next to the things that "Would be Nice to Do". Now, share your list with your partner and spend some time absorbing and discussing their list. You'll find many things will overlap but you will also learn of many other subjects that are important to your partner at this time. With this as a background, a very healthy and collaborative financial partnership can develop.

Sheryl Garrett (@SherylGarrett) is founder of the Garrett Planning Network Inc.

Rick Ferri: Two Financial Takeaways for Newlyweds

I have two pieces of advice. First, live below your means. Second, start saving for your kids' college education before you even have children!

Rick Ferri is founder of Portfolio Solutions LLC and the author of six books on low-cost index fund and ETF investing. His blog is RickFerri.com.

Charles Rotblut: Communicate and Adapt as Needed

Communicate frequently and be prepared to be flexible.

Talk about what you want to save for, what you want to buy and how much you are currently spending. If you are the person who regularly pays the bills (and for most couples, it seems one spouse does this routinely), talk to your significant other about what and how much the bills are. If you actively invest, tell your spouse what you are doing. If there is a big upcoming purchase, tell your spouse. Whatever the financial decision or event is, communicate.

Communicating is not only the right thing to do, it can also help you make smarter decisions. I can tell you personally that I don't spend my money on anything that I'm not willing to tell my wife about. If I think she'll object or have reservations, we'll talk about it in advance.

At the same time, realize your spouse may have very different attitudes toward money or very different financial behaviors. What seems like a rational purchase or investment to you may not seem like that to your spouse. Alternatively, your spouse may want to spend money on something you don't think is a justifiable purchase. So have some flexibility and allow for some leeway. If you find yourself butting heads over spending, set up separate "my money" accounts—accounts set aside for spending on whatever you each want to buy without question. Just be sure to agree on the amount and the source of the money that goes into those accounts.

Finally, I would strongly advise approaching finances with a large amount of forgiveness. There is a reasonable chance one or both of you will make a big financial mistake (and probably many mistakes). You are both human and it happens. No matter how mad you get, stop and ask yourself whether the mistake is really big enough to warrant ending your marriage over.

Charles Rotblut (@charlesrotblut) is a vice president with the American Association of Individual Investors.

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