You’ve booked the venue, paid the catering deposit, and organized for your great-aunt Millie to make the cross-country trip to attend. Everything is going smoothly in the lead up to your imminent nuptials. You’re ready to take your vows — for richer, for poorer.
Now is the perfect time to make sure you and your fiancé are on the same page (or at least, reading from the same book) when it comes to money. You don’t need to iron out all the finer details right now, but having an open and honest discussion about money early on will get you off to a strong start.
We’ve provided these simple money questions to help guide your conversation:
1. May I see your budget?
“Don’t tell me what you value, show me your budget, and I’ll tell you what you value.”
Joe Biden’s words are absolutely correct. By taking a look at your significant other’s budget, you’ll be able to identify strengths and weaknesses, and find any pain points. This is a two-way street, so you’ll need to share your budget too. Now’s a great time to identify any differences of opinion and make compromises.
2. What is your debt situation?
These days, people are getting married later, and that means they’re more likely to bring personal debt into a relationship. Student loans and consumer debt can have an adverse affect on your credit score, so it’s important to discuss your debt situation with your future spouse. Making a plan for how you’ll tackle debt — as individuals or jointly — and getting it all out in the open is a smart move for the future of your marriage.
3. Do you believe in joint bank accounts?
The jury is out on whether joint checking accounts are good for your relationship. Some couples prefer to keep their money separate, each contributing to joint expenses, and others like to pool their earnings for greater financial impact.
If you’re unsure how to make joint bank accounts work for you, a trial run might be a good idea. You could agree to pool resources and pay all major bills and joint financial obligations from your joint checking account for a set period of time. Then you may want to allocate a small amount of money to each partner solely for fun and personal expenses. This amount doesn’t need to be tracked or accounted for, but it’s yours to spend as you like.
Then evaluate how this strategy is working out for you after a few months. This technique is a solid first step toward joint finances, giving the benefit of pooled resources without making you feel deprived of your independence.
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4. How do you plan for an emergency?
According to a recent study by Bankrate.com, only 37% of Americans would be able to pay for an unexpected expense of around $1000 with savings. Agree to debit an amount from each paycheck into an emergency fund. Clarify exactly what that fund will cover so there’s no confusion. Car repairs, yes. Designer purses at half-off or season passes, not so much!
Insurance policies also need reviewing, as married couples are often entitled to discounts on insurance products when combining policies.
5. Are you mentally prepared for the financial changes having a family will bring?
If you’re planning a family, you need to be ready for major changes to your finances. If you both work outside the home, you’ll have daycare bills to cover. If one parent stays home, you sacrifice an income. Either way, there’s less money available. It’s important to discuss how you’ll approach those changes, now. So when you see those two little lines, your first thought isn’t, “How are we going to afford this?”
6. Is owning a home important to you?
Buying a home is the single largest investment most people will make. If you both dream of homeownership, aligning your finances is vital. Saving your down payment, eliminating consumer debt, and improving your credit score require a united effort.
7. How are you saving for retirement?
Are you making the most of a company 401(k) plan? Would you consider purchasing an income property to supplement retirement income? Should you invest in the stock market? Retirement may seem a long way off when you’re newlyweds, but the longer you save for it, the more comfortable your retirement years will be.
A married couple with similar financial goals is a force to be reckoned with. Pursuing major goals like homeownership with your life partner at your side, greatly improves your chance of success. By establishing clear communication about your financial situation, early in your marriage (or ideally, beforehand) you will strengthen your bond, and give your marriage the best chance at standing the test of time. Then all you need to do is sit back and enjoy your honeymoon, safe in the knowledge you’re on the right path financially.
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