NEW YORK (MainStreet)Faith and joint finances go dangerously hand in hand for U.S. marriages, but the young are more financially savvy when it comes to coupling up, according to a new survey.
According to a 2013 survey by COUNTRY Financial Security Index, 63% of married Americans completely trust their spouse's money management skills while 42% say they did not discuss how they would handle their joint finances before marriage.
"These numbers are frightening given the financial affairs of mass America," said Denise Winston, a financial expert in Bakersfield, Calif. "When couples don't talk about their finances, false securities are put into play and they are blinded to potential dangers."
One danger is divorce. About 41% of first marriages end in divorce, according to the U.S. Census Bureau.
When you marry you are entering a legal agreement. If you are not discussing finances, it means divorce is an option," said Winston.
Perhaps because of their trusting nature, 52% of married Americans do not feel the need to ask spousal permission to make purchases outside of their usual household expenses. However, 42% of men are more inclined to seek permission compared to 35% of women.
"Americans are a trusting lot which is fine if your spouse is good with money," said Joe Buhrmann, manager of financial security support at COUNTRY Financial in Bloomington, Ill. "It's important to have conversations about finances at the kitchen table while you're courting and during the marriage."
In a time of mounting debt from credit cards to student loans many couples discuss their pre-existing debt but not a plan to repay it.
Despite a majority of couples having debt, half did not have a plan for who was responsible for paying it down.
Debt planning is huge because someone with bad credit these days may not be able to get a job, rent an apartment or secure a home equity line of credit, according to Winston.
Surprisingly, younger married Americans are more likely to discuss money management before marriage and to factor pre-existing debt into those discussions. About 62% of 18- to 29-year-old married couples had a plan for who would pay down pre-existing debt compared to only 37% for 40- to 49-year- olds.
"It's encouraging to see Generation Y build a solid foundation that will set them up to be financially secure down the road," said Buhrmann. "They grew up with a less than certain job, underemployment, watching the tech bubble burst and having experienced the 2008 financial crisis, which has made them more skeptical. As a result they are more diligent about their finances."
Well before a wedding, Winston advises securing a partner's background check, which starts with a Google search and progresses to include a credit check, arrest record search, investment portfolio evaluation and clearance of back tax liens.
"Regardless of age, you want to go into a marriage fully aware of your potential spouses' liabilities and assets," Winston said.
Children tend to make married couples more responsible. While the U.S. Census Bureau found that the divorce rate among couples with children is 40% lower than couples without children Country Financial's study revealed that 62 % of couples with children are more likely to have discussed how they would handle their joint finances before marriage than 45% without children. And about 75% of couples with children are more likely to manage their finances as completely jointly compared to 63% without children.
"Adding a child is a variable that can upset the apple cart and cause more stress. Children require couples to be more financially organized," said Buhrmann.
--Written by Juliette Fairley for MainStreet