This is it: you’re engaged and probably itching to jump into wedding planning mode and get it all started. But before you get carried away, you must remember that wedding planning is more than just picking a hotel, a caterer, and a wedding gown. After all, you are preparing for a marriage, not just a wedding. Getting excited about putting together the wedding of your dreams is okay, but you also have to focus on how to prepare for marriage financially.
Money is a significant reason for marital discord. Finances tend to be a massive problem in marriage and are often one of the reasons why people get divorced. This is not to pop your happy bubble, of course. It is, however, important to ensure that you don’t end up separating because of financial problems, and a way to do this is to tackle money issues before saying “I do.”.
How To Prepare For Marriage Financially
Here are a few points to keep in mind.
Open a joint bank account.
After announcing your engagement, open a joint savings account for your wedding and beyond. Experts usually advise saving 10% of your income every month, but you may want to keep a little more than that so that you also contribute to your regular savings as a couple. Some couples get help for wedding costs, and if you’re one of them, then lucky you. But you’d still want money saved for a lovely honeymoon or a downpayment for your new home.
Start off on the right foot and budget your wedding wisely.
Be honest with yourself and each other about how much money you can spend on the wedding, and move around that budget. This may mean trimming down your guest list or choosing a more affordable location for the ceremony and reception. How you navigate the initial wedding planning process, especially the financial aspect, can give you a glimpse into how well you can work together as a couple on financial matters.
Know that spending habits are deeply-rooted.
How a person deals with their finances goes far back to childhood. It is essential 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 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 with having “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.
Catalog what both of you bring to the table.
Be straightforward and practical when talking about your current financial standing. Get the total of your salaries, savings, and investments. Review all credit card debts and installment payments. Do you have mortgage liabilities and real estate assets? How much are your outstanding student loan debts? Talk about personal possessions, family heirlooms, antiques, jewelry, and the like. Discuss child support, alimony, and other legal obligations and liabilities for couples with dependents from previous relationships or marriages.
Set your financial goals as a couple.
One exciting part of marriage is having someone to make plans with. As a couple, all financial goals should now be made together, whether home renovation, travel, early retirement, or if one of you is going to graduate school, among others. This way, you can plan ahead and, at the same time, have a grasp of what is essential to your partner.
Sort out your financial roles.
As with household chores, you two must divvy up critical financial tasks, so things stay caught up. Who will keep on top of monthly payments – bills, loans, mortgages, and other routine activities, such as statement filing, maintaining bank accounts, and the like? Will both of you do some of each task or everything together? You may also want to consider seeking the help of a financial advisor to help you organize your finances, especially if your assets, goals, and investment styles are varied and complex.
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. A prenup lays out exactly where your assets will go in case of a split. This is particularly useful to couples with substantial assets before getting married or expecting an inheritance, business, or family wealth.
Rethink consolidating your debts.
It may seem a very romantic gesture to sign your names on each other’s debts, but this can do more harm than good. If one of you gets into marriage with obligations such as a pile of student loan debts or credit card balances, it is better to put the other person’s name on them to not affect the non-debtor’s credit. You will still need to help each additional pay off individual debts. This is to protect the non-debtor’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 an intelligent strategy.
Get familiar with tax implications.
Sit down with a tax professional to discuss the implications of marriage on your taxes. You can file your taxes individually or as a couple, and the tax professional can help you decide which would work best for your situation.
After the wedding
Once you’re married, review and update all your accounts. Work together to ensure that everything is sorted and updated with your current status.
- – Update your beneficiary declarations in your retirement and insurance plans.
- – Add your spouse to lease agreements.
- – Add your spouse as one of your emergency contacts.
- – Update your banks with your new address.
- – Update your bank account and safe deposit box agreements.
The above tips on how to prepare for marriage financially can help you start your life together on the right financial footing. The bottom line is you need to be able to talk about finances openly anytime. Times can get tough down the road, but if your marriage is grounded in honesty and trust, it will be easier to navigate through future financial upsets.
If you need more help, Payment1’s expert team is here to help you sort through your financial questions and options. Contact us today一our staff will be more than happy to assist you.
Image by wayhomestudio on Freepik