We put an extraordinary amount of planning into getting married. The venue, the dress, the band, the flowers, the guest list, the seating plan and the honeymoon can occupy conversations for months, sometimes years. The latest weddingsonline Irish Wedding Survey puts the average cost of an Irish wedding at €36,641 before the honeymoon, with 45 per cent of couples going over their original budget. That’s a serious amount of financial planning for one very special day, but I sometimes wonder how much planning goes into the forty or fifty years that hopefully come after it.
‘For richer, for poorer’ sounds lovely during the vows, but what does it actually mean financially? Before getting married, couples will happily discuss where they want to live, whether they want children and where they’d love to travel. The conversations that are often harder are the ones about salaries, debt, savings, pensions and what happens if life doesn’t follow the plan. Yet these are arguably some of the most important conversations you can have before you get married. Financial compatibility isn’t about earning the same amount or agreeing on every purchase. It’s about understanding what you’re building together.
We talk a lot more today about equality within relationships, and rightly so. Many couples split their mortgage, bills and household costs fifty-fifty. On paper, that sounds completely fair. But life isn’t always fifty-fifty, particularly when children arrive. If a woman takes maternity leave, follows it with unpaid leave, reduces her hours or turns down opportunities because they don’t work around family life, the financial impact can follow her for decades. Her partner may continue progressing in salary and pension contributions while hers slow down or stop altogether. The household spreadsheet might still say fifty-fifty, but the long-term financial picture may tell a very different story.
Imagine a couple who are both earning €50,000 when they get married. Ten years later, one has continued working full-time while the other has taken two maternity leaves, additional unpaid leave and then worked a four-day week for several years. They might still consider themselves a fifty-fifty household, but are their pensions still fifty-fifty? Are their earnings still progressing at the same rate? What about future promotions or employer pension contributions? These aren’t reasons not to take time out with your family. They’re reasons to recognise that childcare and career breaks are family financial decisions, not simply one person’s financial cost.
In Ireland, full-rate Maternity Benefit is currently €299 per week for 26 weeks for those who qualify, although some employers top this up or continue salary during maternity leave. A further 16 weeks of unpaid maternity leave can also be taken. That makes this a financial planning conversation, not simply a maternity-leave conversation. If one parent works part-time for five years, should the pension contributions they’re missing be considered part of the family’s cost of childcare? If one career is temporarily taking a back seat to allow the family to function, should the long-term impact of that be something both partners plan for?
The latest CSO figures show supplementary pension coverage among working women at 66 per cent, compared with 68 per cent for men. The difference in coverage might not sound dramatic, but simply having a pension doesn’t tell us how much is actually being accumulated within it. Time away from work, reduced hours, salary differences and lower contributions can all affect the eventual outcome. A pension statement at retirement can reflect decisions and circumstances that happened decades earlier.
Then there is the bigger question: does your idea of the future actually match your partner’s? I regularly encourage couples to start at the end and work backwards. At what age would you both like to retire? Does one person picture travelling at 60 while the other assumes they’ll work until 70? What income would you like to have? What pensions already exist? Are there old pensions from previous jobs? Are you saving and investing towards the same future, or are you simply paying today’s bills and assuming retirement will sort itself out?
Protection deserves a place in the conversation too. If you’re combining your financial lives, buying a home or planning a family, ask the uncomfortable questions while everything is going well. If one of you became seriously ill, could the other afford the mortgage? What happens if one income disappears? Do you have appropriate life cover, specified illness cover or income protection? How much emergency money do you actually have? These aren’t particularly romantic conversations, admittedly, but neither is discovering during a crisis that you don’t know the answers.
Debt needs to be on the table too. Interestingly, the same Irish Wedding Survey found that 29 per cent of respondents used a wedding loan to help fund their day. There is nothing wrong with spending money on the wedding you want if it fits your circumstances, but starting married life with debt neither partner has properly factored into the plan is a different matter. Before getting married, both people should know what the other owns, what they owe and what commitments already exist.
I’ve met couples who have been together for years and know everything about each other except their finances. When we sit down for a financial review, sometimes it’s the first time they’ve actually seen each other’s pensions, savings, debts and protection laid out together. Very often, that’s when the real conversation starts. There isn’t one correct way to manage money as a couple. Some people combine everything, others maintain separate accounts, and many use a mixture of both. The important thing is that the arrangement is intentional rather than something you’ve simply fallen into.
If you’re getting married, I’d start with five questions. What do we each own and owe today? What happens financially if we have children and one of us steps back from work? What are we each putting towards retirement? What happens if one of us can’t work? And finally, what do we actually want our money to allow us to do over the next thirty or forty years? You don’t need to have perfect answers, but you should probably know whether you’re both answering the same questions.
The wedding deserves a plan. Enjoy the flowers, choose the band, argue over the seating plan and have the day you’ve dreamed about. But don’t spend two years planning one day and no time planning the decades that follow it. ‘For richer, for poorer’ isn’t really about promising that money will never matter. It’s about building a life together where you’re comfortable talking about it when it does.
Halpin Wealth and Mortgages offers free consultations. Visit www.hwm.ie or email [email protected] to learn more.
