Getting married is an exciting time. From announcing the news to your friends and family, to planning a wedding and honeymoon during these uncertain times, you’ve got a lot to think about. So it can be easy to overlook one of the most important subjects that affects newly married couples: money.
Whether you are recently engaged or about to say “I do,” make sure that you and your significant other are on the same page when it comes to your financial future as a couple.
Financial compatibility is very important for a happy marriage. A recent survey found that money is the number one issue married couples fight about. Although it can seem uncomfortable to talk about money with your partner, regular communication about each other’s needs when it comes to managing finances will help build trust in your marriage.
Before you get married and merge your lives – and your money – discuss the following items with your significant other:
Your attitudes toward money are shaped by your backgrounds and the way you were raised. Are you a saver or a spender? Did one of you grow up in a household where money was no object, while the other one’s family struggled to meet basic needs? Financial compatibility is important to minimize conflict. If you like to plan ahead for large purchases but your partner is an impulse shopper, that could cause trouble in your relationship down the road.
Remember to keep each other’s experiences and opinions in mind during the wedding preparation process. Understanding your partner’s priorities can make it easier to reach a compromise between what you want and what you can afford.
Are either you or your partner in debt? If so, what kind and how much? There is a difference between “good” debt (such as student loans or a mortgage) and “bad” debt (like using credit cards to live beyond your means). Do you know what the interest rates are for each loan, and how long until they are all paid off? Identify each other’s financial obligations, then come up with a plan to get and stay out of debt together.
If either of you have a number of high-interest credit card balances, consider debt consolidation with a low-interest personal loan to help simplify your finances and potentially pay them off faster.
If the two of you dream of a major purchase together, like buying your first home, make sure one person’s poor or limited credit isn’t holding you back from this goal. A good credit score is crucial for obtaining the most favorable rates on auto, home, and personal loans.
You and your partner can request a free copy of your credit report from each of the three reporting agencies (Equifax, Experian, and TransUnion) every year. Review them carefully to make sure the information is accurate and there are no fraudulent accounts.
Responsibly using a credit card and paying off your bill each month can help you build and improve your credit score. If one of you has a lower score than the other, consider adding the person with poorer credit as a cardholder to the other’s credit card. It’s also possible to improve your credit by opening a secured credit card.
Do you want to have a joint account with your future spouse, or maintain separate accounts? Some couples open a joint checking account for their shared expenses (like the mortgage and utilities) and keep discretionary income in their personal accounts. If one of you earns considerably more than the other, you may want the higher earner to contribute more toward the household bills.
Create a budget together that includes both of your incomes and expenses so there are no surprises. Make sure you and your partner clearly define your financial responsibilities, such as who will pay which bills. And even if you do choose to keep your finances separate in different checking accounts, it’s important that both of you agree to not keep big financial secrets from each other. You don’t have to share details about every purchase, but some couples find it helpful to set a limit on the amount they can spend without consulting each other first.
Now that you know each other’s debt and credit history, and have established a way to handle your finances as a couple, it’s time to start planning for your future together. Here are some topics to consider:
If all of this seems a little overwhelming, don’t worry. You don’t need to figure everything out at once. Although it may not sound very romantic, consider scheduling a monthly date night to discuss your finances. As your financial situation changes and your goals evolve, ongoing communication will be the key to a happy, successful marriage.