Your interest rate can make – or break – your monthly payment. For many of us, buying a car is a necessity. In places where public transit is limited or non-existent, it’s literally the only way to get around. As workers return to the office and find themselves commuting…
As you prepare to share your lives together, don’t forget to get on the same page financially.
From your first date all the way up to planning your wedding, the topic of money has likely come up. Whether you’ve been open about money during your entire relationship leading up to marriage or have unknowingly pushed the topic off, it’s important to have a serious and intentional discussion about finances before you both say ‘I do.’
While it’s not the most exciting conversation you’ll have with your intended, it’s a necessary part of maintaining a healthy relationship and achieving financial security.
Starting the Money Conversation Without Awkwardness
Money can be a tough subject to bring up especially if you’re in the midst of planning a wedding. However, the sooner you talk about it, the better. Consider changing your perspective about having a money conversation.
Realize you talk about money all the time in your relationship. This could involve discussing what to buy, what to eat the following week, or what to do with your paycheck. These topics can lead to some important premarital financial discussions.
Let your partner know that you value their opinion and voice when it comes to how you’ll manage money as a married couple. Set a time and date for your money talk, and make it a judgment-free zone. Take turns talking, listening, and respecting each other’s thoughts and views.
You can even get your partner excited by setting up a finance date where you can discuss your future goals and dreams over takeout. Build on the excitement you already have about starting a new life together and tackle some important financial topics.
Discussing these six areas below will give you both a better understanding of how to manage money together in the future.
Money Topic #1: Consider Combining Finances (or Not)
Have you and your partner talked about how you’ll handle income and expenses once you’re married? Many couples opt to completely combine finances but this is not the only option. Combining finances may mean you have one bank account and communicate closely about what to do with your money in regards to saving, spending, and paying off debt.
The key benefit of combining finances is that both you and your partner will have everything in the open. You can see each other’s spending, income, and make each financial decision jointly. If only one person works or earns more than the other, combining finances completely could level things out.
The downside is that you may not want to run a $5 coffee purchase by your partner all the time or get defensive about other purchases that may not align with their values. It may also be hard to surprise your partner or get them a gift for the holidays when you’re sharing one bank account.
Another option is to have separate and joint accounts. That way, your connected accounts allow you to be transparent about your finances while also meeting joint goals. Joint accounts make it easy to transfer money back and forth so you and your partner can save money and pay bills together. Yet, you’ll still have your own separate account if you’re looking to maintain some financial independence. Regardless of what you choose, it’s important to make sure you are on the same page and set clear guidelines.
Questions to Ask
- How do you feel about combining finances and why?
- Would you rather set up a joint bank account or joint savings accounts?
- How do you feel about personal allowances? (Allowing each person the freedom to spend $X monthly on things that are important to them no questions asked)
Money Topic #2: Discuss Money Values
You and your partner probably share a lot of the same values. When it comes to money, however, your values and opinions may differ. A lot of this comes down to how you each were raised and what your relationship with money was like growing up.
Ask your partner what they think about money in general and what they consider to be financial successes or setbacks. Make sure you respect whatever their initial thoughts and opinions are even if they differ from your own.
This could be the perfect time to share childhood money stories and how money got discussed and handled by each of your parents.
If possible, see if you can even merge some values together during this exchange. For example, maybe you value saving and your partner values nice things. However, you both think it’s important to increase your income and shop around for good deals. This shared value can honor both of your individual values and contribute to more financial harmony in your household.
Questions to Ask
- How do you feel about money? What was your relationship with money like growing up?
- How did your family’s economic status impact your thoughts and beliefs about money?
- What does financial success or failure mean to you?
- How are our money values alike or different?
Money Topic #3: Get Clear on Financial Goals
Another easy topic to discuss before marriage is financial goals. Both of you may have already thought about what life would be like after marriage and what you’d accomplish together. This can jumpstart a conversation on what your joint financial goals will be.
Do you want to buy a house in three years? Are you in need of a new car? Do you want to take two big trips annually? Talk about how these goals are important to you then determine how you’ll reach them.
Financial goals can be exciting to set together, but they also help you get on the same page since you can create a game plan together as well. If your joint goal is to save money for down payment on a home, action steps you might take like budgeting and bringing your lunch to work will make more sense.
Schedule regular money meetings or finance dates when you can check in on your financial goals together. Acknowledge your progress and brainstorm ways to overcome obstacles and stay on track long-term.
Questions to Ask
- Where do you see us in three-to-five years?
- Which financial goals do you want to prioritize right now and why?
- What specific actions can we take to reach our joint financial goals?
Money Topic #4: Bringing Debt Into the Marriage
Married couples carried an average debt of $112,627 in 2019, according to Experian. This makes debt a very important topic to cover before marriage.
Sit down and calculate how much debt both you and your partner is bringing into the marriage. This includes everything ranging from credit cards and student loans to personal loans and your car loan. Write down each type of debt you both have including the creditor, amount, and interest rate. See what type of debt you feel comfortable with paying together.
If you’ve decided to combine finances once married, it may make sense to combine debt totals as well.
Ultimately, it’s up to what you both decide and feel comfortable with. This is also a perfect time to check your credit score together and come up with a debt repayment strategy together. Decide which debt you’ll focus on first, then come up with ways to cut expenses (for example, you can refinance your car loans) and earn more to pay off your balances.
Questions to Ask
- How much debt do you have? Who are your lenders?
- When was the last time you checked your credit score?
- How important is paying off debt to you?
- How do you feel about combining debt when married and paying it off together?
- Is there any type of debt you’d rather not combine?
- How do you want to prioritize which debt to pay off first?
Money Topic #5: How You’ll Budget
Money disagreements are one of the leading causes of divorce. Aim to keep money issues at bay by discussing how you and your significant other will budget and pay bills before the big day.
There are so many different ways to budget whether you want to use a pen and paper, an app, or a percentage-based budgeting system like the 50/30/20 budgeting method.
The 50/30/20 budget is a great starting points and it allows you to put:
- 50% of your income toward needs and core living expenses
- 30% toward flexible expenses and wants
- 20% toward debt and saving
Your household budget gets built around your needs and joint goals. By using percentages, it makes it easier to budget for certain expenses even if income fluctuates. The key to sticking with a budget is to track your spending habits and progress. It’s not enough to just list out expenses and needs each month. You also have to check back in and update your budget as the month goes on.
Set roles for each person so it’s clear who will pay certain bills and how much money will be saved each month. Then, set a mutual time to check in on household finances weekly. You can even practice doing this before you get married.
Questions to Ask
- What type of budgeting style do you prefer?
- Do you consider yourself a saver or spender and why?
- When would you like to sit down each week to go over finances?
Money Topic #6: Estate Planning and Other Financial Obligations
Estate planning is not an exciting topic, but it’s essential to ensuring that you will be taken care of should something happen to you or your spouse.
Consider the following when doing your estate planning:
- Who will be the beneficiary on your insurance policies, IRA and 401(k) plans?
- Who will make medical decisions for you?
- Do you need to update your will?
It’s easier to make plans in advance, so you don’t put off making a decision about estate planning before it’s too late.
You’ll also want to consider how insurance and other financial obligations will be handled now. Will you and your spouse be on the same health insurance plan once you get married? Should you increase your life insurance coverage?
Consider how you’ll save for college if you decide to have kids. Also, retirement is another great topic to discuss before marriage. Make sure you and your partner are on the same page about how much to save for the future and how you’ll go about it.
Questions to Ask
- How much life insurance do you feel we’ll need?
- How important is retirement planning to you?
- What do you want to do about health insurance when we get married?
Gain Confidence in Your Joint Financial Plan
Maintaining good communication through marriage is important and money topics will come up sooner or later. Now that you know some important money questions to ask, you can jumpstart some important conversations. Talking about finances isn’t always easy, but once this conversation is out of the way, you can get back to the more exciting parts of wedding planning and focus on your life with your future spouse.