If you're getting married, there's a roughly 50% chance you'll get divorced. Those odds should cause you to consider your finances and what happens if things don't work out before you tie the knot.
That may seem like tempting fate, but it's simply planning for all contingencies. Nobody likes buying flood insurance, for example, but having it won't change your odds of having your home damaged in a flood.
It's important to talk about money with your mate before you make a (hopefully) lifelong commitment. That means making a prenuptial agreement even if you have very little in the way of assets right now.
What is a prenup and why do you need one?
"A prenup is a legal document that usually requires serious discussions between the couple themselves and between their attorneys," wrote Cerity Partners partner Katherine Klimentova in an email interview with The Motley Fool. "All this takes time, and no one should be rushed to complete the agreement."
It's also important for couples to discuss all areas of their financial past, present, and future before outlining a prenup. Klimentova, whose company offers wealth management and financial planning, wrote that it's very important to start this process well before your wedding day.
"Courts want to see that each party had ample time to ponder the provisions and that it wasn't signed under time or other pressure," she wrote. "Additionally, if one party is making a prenup a requirement for marriage, it is best to learn as soon as possible if the couple will be able to agree on the terms."
Nobody likes having these conversations. It's not fun before you even get married to plan out how your assets (which may not even exist yet) would get split should your marriage break up. It's necessary, though, and it may even help a couple stay together.
"Numerous studies have found that the second leading cause of divorce (after infidelity) is money issues and the inability of spouses to communicate and be on the same page about finances," Klimentova wrote. "A prenup is usually the best solution for establishing financial 'ground rules' and making decisions about current and future assets and income, as well as debts."
Talking about a prenup forces each member of the couple to lay their financial issues on the table. That lays the groundwork for a healthy relationship going forward.
"Getting married is one of the most significant financial undertakings in one's life and being properly prepared for both the downside and upside is a smart decision," Klimentova wrote. "It's much better to create a plan when you love and respect each other as it will save a lot of arguments and legal fees in the future if the marriage does end in divorce."
We've only just begun
Couples need to regularly have financial discussions, and that might mean amending a prenup. If a married couple has a child, for example, one spouse may sacrifice his or her career to care for the new member of the family. That's only one example of a major life change that impacts finances, but it's important that the topic gets talked about regularly.
"What seemed fair and agreed to by the parties at the inception of the marriage might be out of date under current circumstances and what looked like a princely sum at marriage might look miserly today," Klimentova explained.
Financial talks are a chance for couples to align their hopes and dreams. If you want to work toward early retirement and your partner wants to live in the moment, well, you have some work to do to figure out the right balance. Not doing that work, though, makes it much more likely that your choices won't be aligned and you'll careen toward an unpleasant ending.