Money doesn’t exist in a vacuum. Financial issues have a way of becoming deeply embedded in our closest personal relationships. The hard decisions families make aren’t just about numbers on a bank statement — those numbers are woven together with our hopes, our fears, our sense of duty, and our love for the people we care about.
In your personal life, there’s no closer financial relationship than the one you have with your spouse. Under Guam law, your spouse has an equal share in any property or debt you acquire while married (with some exceptions). When children arrive, you make joint decisions about their needs.
The stakes grow higher when times get tough. With a job loss or chronic illness, you and your spouse act as each other’s safety nets. A bad credit score from one spouse will affect you both when you apply for loans together. If you become unable to make payments on “community debt” (debt you took on after you got married), legally, that debt can be satisfied first with “community property,” assets owned jointly by you and your spouse.
Given the stakes, it’s important to operate as a team. Your spouse is your business partner in your household: a financial move made by one will affect the other. A strong financial relationship can reinforce your ties with your spouse; a weak financial relationship can cause those ties to fray. To fortify your financial ties, here are a few things you can do.
• Get to know each other’s finances. Before you say your vows, you both should come clean about what you have and what you owe. Debt incurred before marriage is “separate debt,” and though you are not legally responsible for each other’s separate debt, debt in general will affect your credit score, and along with it, future loans you hope to get with your spouse.
Avoid surprises by sharing your information early: pull out your most recent financial statements, and order your credit reports. Ask your spouse to do the same, and trade information. If you both understand the financial context in which you’re making decisions, you can reduce or avoid disagreements in the future.
• Talk about your financial habits and attitudes. Everyone has a different attitude toward money. Financial attitudes are shaped by so many different factors: what your parents taught you, what you’ve picked up, the difficulties and successes you’ve had, the rise and fall of the economy.
Try to understand your spouse’s attitude toward money, and how it functions with your own. You may not always agree — financial compatibility isn’t a given. But if you’re committed to open and honest disclosure, and you know each other well enough to anticipate each other, your mutual finances are bound to run more smoothly.
• Agree on a financial system that’s fair to both of you. You can reduce financial friction if you combine and separate accounts in a system you both agree on. If you both want autonomy over your personal discretionary funds, keep most of your accounts separate and dedicate one joint checking account to mutual expenses. Don’t share credit cards: debt incurred by one spouse will appear on the credit report of the other. Be clear from the outset about your shared resources, and together you can take on greater challenges ahead.
Michael Camacho is the president and chief executive officer of Personal Finance Center. He has more than 18 years experience in retail banking and with financial institutions in Guam and Hawaii.