Guest Post By: Kendra Madsen
You did it! You have found the person you want to spend the rest of your life with! Getting married is one of the biggest and most exciting decisions you will make in your life. Whether you are in the crazy wedding planning phase or just coming off the high of being on your honeymoon, you should be happy and excited about your future with your SO. But while it may be flowers, dresses, and champagne right now, reality will hit eventually and one of the biggest parts of reality is your finances. While it would be great if we could pay the bills with love, I don’t think your landlord will be too fond of the idea. Money and finances are going to play a big part in your relationship, so it’s important to make the right moves financially now to lay the foundation for a financially successful marriage.
Talking money can be a difficult subject to broach, especially with someone you love and want to impress. To save yourselves from future difficulty, however, it’s important to start discussing your finances sooner rather than later with your significant other. There’s a reason financial disagreements are the number one reason for divorce, and there are ways to prevent or handle these disagreements.
Have the money talk
The first thing you can do is have the talk. No, I don’t mean the birds and the bees. I mean the money talk, where you both come clean about any financial skeletons in the closet and discuss each of your views on money and how it should be spent. Now, this conversation is going to be tough, but you need to accept that. This is not a time to be telling white lies about your credit card debt; this is the time to tell your significant other exactly what your financial situation looks like and for you to learn the same about them. This will help the two of you get on the same page and get an idea of what your finances will be like when you get married. This talk is also the time to discuss whether you would like to get a joint account, keep separate accounts, or some sort of combination. No two couples are the same, so you need to chat and figure out what you think will work best for the two of you.
This is also a time to break out some pen and paper and each write down what you see as “needs” and “wants.” Vacations may be a need for you, but to your spouse that may be considered a want. Talk about these differences and find where you can agree and where you can compromise to make sure each other’s needs will be met financially in your marriage. Once this first talk is over, create a schedule of how often you will hold these “money talks” with your spouse. Make these chats a tradition so that you can continually work to be on the same side regarding your finances.
Create a debt repayment plan
Now that you have had “the talk,” take a look at the debts that you each are bringing into the marriage. Whether it is student loans, credit cards, a mortgage, or personal loans, look at the interest rates that each debt has and figure out the best plan for the two of you to repay those debts. Consider refinancing your debts in order to get lower interest rates or lower payments, or talk about cutting some things from your budget in order to get those debts paid off fast. Do some reading to figure out what plan will be best for you and if you aren’t sure what to do with your debt, meet with a financial advisor to help you get on track.
Set financial goals
After gaining an understanding of your financial situation as a married couple, talk about what financial goals you would like to set together. Do you want to buy a house this year? Do you want to have children in a few years and have one of you stay at home with them? Do either of you have educational goals that will require you to leave your job and attend school full-time? These are all exciting life events, but they also take a good deal of financial planning in order for them to work. Talk about your financial goals and prioritize what will be most important for your new family.
Once you have decided on your financial goals together, create a plan to make those dreams come true. What steps do you need to take in order to reach these goals? Will you need to work extra hours or take on a side hustle for the next few years in order to save up for your kids? Will you need to cut out eating out in order to save for a down payment for a house? Simply talking about your goals won’t make them happen. You have to create a step-by-step plan and follow that plan in order to reach those goals.
Create a joint emergency fund
The last thing you want to think about when you are preparing for your marriage is what could go wrong. It’s easy to convince yourself that bad things like your roof collapsing or your spouse getting a serious illness will never happen to you. And hopefully, they won’t, but it’s important to be prepared for those times when bad luck strikes. This is why you need to create an emergency fund between you and your spouse.
You may have decided that you will keep separate bank accounts from your spouse, but it is important to have a joint emergency fund so that both of you will have access to it if something happens.
Invest in life insurance
This last financial move goes hand-in-hand with creating an emergency fund. You want your loved one to be taken care of no matter what happens in life. Investing in life insurance is one way you can make sure that your spouse (and any other dependents you may have) will be taken care of financially should anything happen to you. Life insurance will not only cover the expenses involved with the funeral, but can also be used to pay back any outstanding debts you left behind, give your spouse the financial means to continue their life as it was before, and give your children funds for schooling.
While life insurance may seem like something you don’t need to worry about until you’re old and gray, now is the best time to get a life insurance policy. Life insurance costs will only go up the older you are, so if you get a policy while you are young and healthy you will have better rates the rest of your life. Make sure to talk with your spouse when deciding what type of policy you want to take out. There are many choices available for each of the different phases of life you find yourself in.
Setting expectations for open communication about your finances with your future spouse will help you combat misunderstandings and arguments that could erupt in your marriage. Take these five steps in order to prepare yourself and your spouse for an awesome marriage that will be financially secure and built on a strong foundation.
Kendra Madsen is a freelance writer who loves healthy living, the outdoors, and obsessing over plants. When she isn’t writing, Kendra can be found exploring the mountains with her puppy or curled up at home with a good book. For News from The Nest submissions or suggestions, write to [email protected].