Getting married? Discuss these 7 financial topics with your partner
Communication is the first step to financial harmony.
As you're planning your wedding, take time to plan your financial future as well. Discussing your finances and goals with your partner can help you build a happier, more fulfilling life together.
As with other aspects of marriage, good communication is key. Start your discussions with these seven topics:
1. Attitudes toward money
Some people see savings accounts as security blankets; others see them as ways to pay for trips to Tahiti. If you and your partner view money differently, make sure your financial plans respect both of your financial needs and preferences.
2. Contingency plans
What happens if life takes an unexpected turn? You and your partner should have plans in place for scenarios such as:
- One of you losing a job, or wanting to go back for additional schooling
- One of you wanting to leave his or her job to spend more time with family
- One of you wanting to take a job in another part of the country
- One of you losing your ability to work and earn an income
3. Level of debt
Have an honest discussion about your debts. "Marrying someone with excessive debt can have serious repercussions," says financial advisor Harry James of Lockton Financial Advisors based in Kansas City, Mo., who notes that a partner's credit issues may make it more difficult to qualify for a mortgage or other loan. It can also prevent you from contributing the necessary amounts to your savings and retirement accounts.
If debt is an issue, make it a priority to pay your bills, starting with the ones that charge the highest interest.
4. Joint or separate accounts
Some couples merge their finances completely when they marry, while others prefer to keep them separate. If you plan to maintain your own accounts, consider the following approaches:
- Open a joint checking account to cover shared costs, with each person depositing a fixed amount each month.
- Split bill-paying responsibility based on each partner's income.
5. Realistic budgets
Excessive spending can wreak financial and emotional havoc on a marriage. Avoid this problem by creating a monthly spending plan that:
- Helps you save for retirement by paying yourself first
- Includes short- and long-term goals
- Allocates funds for housing, transportation, debt repayment and miscellaneous items in amounts that are agreeable to both of you
- Allows each of you some independent spending
6. Sticking to your budget
Stick to your budget and update it regularly.
7. Estate planning
Now is the time to decide how your assets would be distributed should something happen to you or your partner. Take the following steps:
- Review the beneficiary designations of all your accounts, including 401(k) plans.
- Create a will if you don't have one. If you do, update it.
- Review how much each of you depends on the other's income, and consider purchasing life insurance that could replace that amount.
These discussions aren't just about money — they're about making the most of your life together.
Fast Fact: The average cost of a wedding increased nearly 23 percent in 2010, from $19,581 (2009) to $24,066 (2010), according to The Wedding Report, a research company that tracks and forecasts the number of weddings, spending and consumer trends for the industry.
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