It’s your big day. Are you prepared financially?
We’ve all heard that statistics: many marriages end up in divorce. The #1 issue couples fight about is finance. Instead of ignoring these stats, why not meet them head on? There are clear steps you can take to ensure that your family will have a chance of succeeding where others fail.
Create a Debt Strategy
These days many people head into “wedded bliss” woefully unprepared for how to handle real life as a married couple. Quite often, one or both spouses have student loans or other debt that can be a drag on the beginning years of married life. Before tying the knot, sit down with your future spouse and walk through both of your credit reports. This will be a refreshing a “financial cleanse” right before the big day. Together, you can develop a plan to improve your scores (if necessary) before any large purchases. You can also put together a plan to eliminate debt as quickly as possible. You’ll have a much stronger chance as a couple if both people know the entire playing field before the wedding.
Set Up Your Budget
The budget discussion is one of the most challenging ones a couple can have. Depending on how long it’s been since college days, money can be tight during the early part of one’s career. You should both agree to the “family” financial meeting (Joe and I discuss this over and over and over again…) and make it a priority each week. Then, both of you are caught up on each bill, how you’re doing as a couple working toward your goals, and there are no surprises.
Plan For/Against Kids
Children are expensive. It’s that simple. You’ve probably already discussed your feelings with your future spouse about kids – how many, your favorite names, etc. – but it’s unlikely that you’ve had the chat about how much they cost. To put it in perspective, if a client came to me today and wanted to fully fund a 4-year public university degree for a newborn, they’d have to set aside around $400 per month from day one until the child’s 18th birthday to be close. That’s a lot of money. Start now if possible – open a 529 plan in your own name, and then if you have children change the beneficiary to them.
Planning for the long-term seems so difficult at the beginning of any relationship, but it’s one that must be considered. Begin your married life by contributing as much as you can to your retirement plans – at least up to the company match, if offered – and plan to add a small increase each time your pay is increased. The road to millions of dollars starts at $100 a week into your 401(k) plan. Get started right away.
If you’ve been single for a long time, the thought of having someone else pouring over your bank statements questioning every transaction sounds like death by a thousand paper cuts. Simplify this by having the “his, hers, and ours” accounts and setting up through your budgeting process a small amount that each of you can spend – no questions asked – out of your own accounts. By using this approach, combined with budgeting together, your financial lives will be blissfully combined, yet separate as well.
Marriage is a big decision and a life changing one at that. By spending a few hours before you’re married discussing the financial impacts, you can spend more time enjoying your spouse and less time wondering if their credit score is going to make it impossible to buy a new house.