Discuss Finances Before Marriage
Talking about your finances may be uncomfortable, but if you are preparing to marry someone, it is necessary. This starts with an honest conversation about your past and current habits, followed by deciding how you will handle finances together after marriage. It is crucial to have an open and honest conversation about any challenges you have regarding money before you start your lives together.
Discuss your current financial status.
Don’t wait until after the wedding to talk about money. It’s best to get it all out in the open sooner rather than later, so that you can work toward financial security with one another. Consider the following questions with your partner:
- How much money do you both earn? You may not always have a lot of control over your earnings. However, it is good to be aware of how much income you will be bringing in together. This may help you with future discussions such as buying a home or having a child.
- What are your credit scores? Obtain credit reports and review them together. One site for getting a free annual credit report, no strings attached, is www.annualcreditreport.com.
- What are your respective money styles? Are you a penny-pincher or a big spender? Knowing your financial tendencies—and those of your partner—can help you manage differing money priorities. Even seemingly “financially incompatible” couples can make a marriage work, so long they are willing to communicate and compromise.
- Are you both able to pay bills on time or do you have any outstanding bills? You may need to evaluate the monthly expenses you each have and how you might cut back if necessary once you are sharing those expenses together.
- How much do each of you owe on credit cards and loans? Be straightforward about your spending habits and be willing to make adjustments as necessary.
Determine how you will handle finances together.
Now that you know your partner’s current financial status and he/she knows yours, this is a great point to determine how money will be managed once you tie the knot. Will you maintain separate accounts or will you have a joint account? Depending on your unique circumstances, you may want to consider contributing money to a shared savings account. Any marriage will face financial challenges from time to time. It will give you both peace of mind to have (and continually develop) a nest egg that can be used in times of financial crisis. One or both of you may have some debt that needs to be paid off. Come up with a plan for how this will be accomplished and stick to it.
Budgeting for the wedding is good practice!
Budgeting for your wedding is often the first time couples will handle financial decisions together. This involves being open about your expectations, goal planning, and of course, compromising and making decisions together. One of you may want the extravagant wedding of your dreams while the other might be more frugal with wedding expenses. You will need to have a realistic conversation about how much money to spend and learn to compromise. This scenario will be good practice for the financial decisions you will encounter in your future together.
You have chosen to make a commitment to one another. You will be miles ahead when you and your partner both take the time to disclose the good, the bad and the ugly in terms of your financial history and status.