You know exactly what you are going to wear on your Big Day, and you’ve had the venue picked out since you were 10. As you inch closer to marriage to the love of your life, you might be squaring away every detail of your wedding — but what about what comes after?
“Financial problems” is a significant reason driving over one half (55.6 percent) of divorces. Though most couples admit that money troubles weren’t the main reason for the divorce, they do attest that it enhanced their stress and contributed to building tension within the relationship.
Even if you are about to wed your soulmate, you could be driven apart by differing financial attitudes and behaviors. Here are a few ways you both can prepare for your impending marriage by talking about and planning your finances for the foreseeable future.
Perform Financial Inventories
You can’t make a financial plan until you understand your current financial circumstances. Both partners need to sit down and reveal their respective financial situations, providing accurate information about their bank accounts, their existing debts, their retirement savings and other financial assets or liabilities. It might also be useful to review typical spending and saving behavior, which might demand a month or so of tracking income and expenditures using money management software.
It is imperative that you and your partner commit to complete honesty during your inventories. Unless you have a prenuptial agreement that keeps your finances separate, your finances will (more or less) combine after you say “I do.” Thus, hiding anything from your partner will weaken your financial stability and could lead to a rocky relationship.
Determine Financial Responsibilities
In traditional marriages, one spouse takes responsibility for earning an income while the other takes care of the children and manages their property. Because most modern households have two working partners, you should discuss how you will combine your incomes — will you deposit all your income into a joint account? Keep your accounts separate but deposit an equal amount into a shared account? Deposit a proportional amount based on your incomes? Etc. You should also talk about who will keep track of bills and make sure they are paid on time.
Many couples have one member who is exceedingly financially organized and competent and one member who is perennially behind on bills and keeps their receipts under the passenger seat of their car. If this sounds familiar, you should have a conversation with your soon-to-be spouse about how you might divvy up financial responsibilities. For instance, if you have organized financial files, you might take responsibility for paying bills and managing joint accounts, and in return, your partner might perform a larger portion of some other chore.
Establish Financial Goals
Hopefully, before you started planning your wedding, you talked to your partner about your life goals — whether or not you would have children, where you hope to live, your career aspirations, etc. With your combined goals in mind, you should work together to develop financial goals, which will provide your lifestyle foundation and allow you to pursue your intentions.
Your financial goals should follow the SMART guidelines: specific, measurable, achievable, relevant and time-based. They might concern paying down student loans, improving your credit score, saving a property down payment, building a travel fund or saving enough to start a family.
Develop a Family Budget
Finally and perhaps most importantly, you need to develop a budget that works for both of you. You will never achieve your financial goals if you don’t have a plan in place, and your budget should function as your plan. A good budget considers income, fixed and variable expenses as well as savings goals to give your family a roadmap for spending over the coming week, month and/or year. Budgeting with another person will help you stay accountable, because your relationship will be affected by your ability to stick to your budget. However, you might take advantage of other tools that assist with accountability, like the envelope method, which gives you a finite amount of cash for specific purposes every week.
Not talking about money is a bad strategy for a marriage. Even if you live comfortably, you should have serious conversations about your financial pasts, present and future — and you should continue to talk about your money on a regular basis to avoid any conflicts that could interrupt your married bliss.