My kid brother and his long-time girlfriend of over seven years are finally tying the knot. Despite spending a significant portion of their lives together, they’ve never cohabited or dug deep into each other’s financial details. My mind wanders back to a brief chat about money my husband and I had before getting hitched which comprised mainly of, “What’s your income?” followed by “Cool, mine is this. We should be able to get by, right?” Oh, how wonderfully young and naive we were.
Our ignorance about each other’s financial situations led to many squabbles during our first year as a married couple. However, we weathered the storm, and six years later, we’re wiser in our financial management. Many arguments could have been averted, which is why I decided to share some financial wisdom with my brother, and anyone else preparing to say “I do”.
1. UNDERSTANDING EACH OTHER’S DEBT
Be aware of your combined debt. I discovered my husband’s $2,000 credit card debt shortly after our wedding, and he learned about my $20k student loan. If you’re gearing up for a lifetime together, discuss your debts and devise a repayment plan. It’s important to decide if you’ll join forces in paying off the debts, or if each party takes responsibility for their own.
2. CHECK EACH OTHER’S CREDIT SCORE
If you’re planning big acquisitions like a house or car post-wedding, both of you need good credit scores for optimal deals. Postponing credit score discussions could deal a harsh blow if your partner’s score turns out to be significantly lower than yours.
3. HAVE A BUDGET
Determine your cost of living. Although you might save more with two incomes, it’s essential to avoid reckless spending or living above your means.
4. COMMUNICATE REGULARLY
Maintain a consistent dialogue about your finances. Money talks might be uncomfortable for some, but open communication reduces avoidable financial disputes.
5. ESTABLISH A SPENDING LIMIT
Decide on a spending cap above which you need to consult each other. For my husband and me, it’s $100 – not a big deal, but enough to affect our budget.
6. CREATE A “FUN FUNDS” ACCOUNT
My husband owns an account with a fixed sum of money transferred to it each payday. He has full discretion over this “fun fund,” which has helped smoothen our financial journey.
7. ALIGN YOUR LONG-TERM FINANCIAL OBJECTIVES
Discuss your financial goals like homeownership, retirement visions, or children’s education funds. These are costly financial targets that need careful planning and saving. It’s crucial to ensure mutual agreement and to dismiss any assumptions about your partner’s ideas about money.
Feel free to share more financial advice for newlyweds or any financial lessons learned along your marital journey.
SmartAsset.com
