This is it: you’re engaged and you’re probably itching to jump into wedding planning mode and get it all started. But before you get carried away, you have to remember that wedding planning is more than just about picking a hotel, a caterer, and the wedding gown. After all, you are preparing for a marriage, not just a wedding. It’s okay to get excited about putting together the wedding of your dreams, but you also have to focus on important things. One of which is handling your future finances as a married couple.
Money is a major reason for marital discord. Finances tend to be a huge problem area in marriage and is often one of the reasons why people get divorced. This is not to pop your happy bubble, of course. A way to make sure that you don’t end up separating because of financial problems is to tackle money issues before getting married.
Here are a few points to keep in mind.
Know that spending habits are deeply-rooted.
How a person deals with their finances goes far back to childhood. It is important to discuss how you and your parents handled money and what money meant to the family while you were growing up. Money issues are not just about money. They go beyond that. They are sometimes actually about security, control, and self-esteem.
Joint or separate accounts? Decide.
Make up your mind on this early on. The decision will depend on what will best suit your needs. Some couples find it practical to have separate budgets, while others are fine to have “one money” for everything. There are many ways to navigate this, and it’s important to discuss all ways and come up with one that you are both comfortable with.
Openly discuss your current financial status.
Cash flow, savings, emergency fund, retirement plans, investments, and future plans — you and your future spouse must be able to talk about these things openly and lightly whenever needed. Before getting married, you two should have a solid understanding of each other’s financial situation. Make sure that you are also comfortable discussing all aspects of your finances with each other.
Set your financial goals as a couple.
One exciting part of being in a marriage is having someone to make plans with. As a couple, all financial plans should now be made together, whether it’s home renovation, travel, early retirement, or if one of you going to graduate school, among others. This way you are able to plan ahead, and at the same time, have a grasp of what is important to your partner.
Save your financial future with a prenup.
This may be the least romantic thing to do amidst planning your dream wedding, but this is very important. Basically, a prenup lays out exactly where your assets will go in case of a split. This is particularly useful to couples that have substantial assets before getting married or are expecting an inheritance, business, or family wealth.
Rethink consolidating your debts.
It may seem like a very romantic gesture to sign your names on each other’s debts, but this can actually do more harm than good. If one of you gets into marriage with debts such as a pile of student loan debts or credit card balance, it would be better to put off putting the other person’s name on them so as not to affect the nondebtor’s credit. This does not mean that you are not going to help each other in paying off individual debts. This is just to protect the nondebtor’s credit for future use. If you are looking to use good credit to purchase a home or car in the future, this could be a smart strategy.