For richer or poorer – you and your fiance will soon be making this promise to one other. Have you had any discussions or made plans for your financial future? Money matters can be a difficult topic of conversation. Addressing financial issues now can alleviate unnecessary stress later.
Experts say money is the number one reason couples fight and is the leading cause of divorce. Here are some tips on how to open a dialogue with your fiance and settle financial matters before they become issues.
Planning a wedding is a happy time for engaged couples. And although talking about money can be difficult, isn’t it better to find out about credit card debts and student loans now rather than later? Sit down with your fiance and assess where the money is going. Address your spending styles and survey the damage. Are you an avid shopper? Is he a saver? Compromise with one another on your spending differences.
Discuss Money Management
Don’t wait until after you walk down the aisle to decide if you are going to maintain joint or separate bank accounts. Many couples like to maintain individual checking accounts and one savings account. Some prefer to combine everything . Remember that it’s completely up to you and your fiance. Check your progress monthly and make any necessary adjustments along the way. Setting a budget doesn’t have to be difficult. Remember to pay yourself a weekly or bi-weekly cash allowance and track how you are spending it.
Create an Emergency Fund
Couples ideally should have a cash total equal to 3-6 months of expenses in a cash bearing account. This may seem like an overwhelming amount right now. Your new combined income situation may actually lessen your overall debt. Try to build up this emergency fund as quickly as you can.
Consider Hiring a Financial Planner
Whether your financial needs are simple or complex, a financial planner is an asset in your corner. Brides hire wedding consultants to help with the details of their weddings because they are experienced in planning weddings. Brides should look at financial planners the same way.
Financial planners give couples peace of mind knowing that someone is there to watch over their investments. Their job is creating and preserving wealth.
Plan for Retirement
Even though retirement may be 30 years away, you should consider planning for it now. Experts recommend that 10-12% of your gross income be invested for long term.
Determine Your Financial Priorities
Managing your money is much easier when you have a clear picture of what you want to accomplish in your lifetime. There are many definitions of financial security and all of them are personal. Take time to sit down with your fiance and write down your dreams. Do you want to buy your first home soon? Are you planning on starting a family? Paying down existing debts should be a priority. Discussing long-and short-term financial goals as a couple will help you begin creating your own financial road map.
Assess Insurance Needs
Do you have adequate life and long term disability? Experts recommend couples begin thinking about properly insuring not only the new residence and automobiles, but taking a good look at life insurance as well. Experts say life insurance coverage should equal between 10 to 14 times your annual income.
Make Wills and Trusts
Couples may not realize this, but to avoid probate court and legal hoops, name beneficiaries, or someone who can make decisions for you in the event you cannot.
Marriage is a time for celebration. From handling day-to-day finances with your future spouse to buying your first home together, smart financial management is key to starting out on the right track.
Things to Think About
- Set a budget, track expenditures and discuss how existing debts will be handled
- Review existing insurance policies and change beneficiaries after the wedding
- Set a plan to save money for emergency fund
- Discuss investments
- Plan for retirement
- Keep talking