10 money matters to discuss before marriage
Are you planning to tie the knot in the near future? Here are some financial issues you should examine first.
This post comes from Allison Martin at partner site Money Talks News.
It's always fun to discuss the excitement of your wedding plans, but what about the not-so-fun topics? Among these are your personal finances and how you plan to handle money matters as a couple.
Unfortunately, a survey of engaged couples by the National Foundation for Credit Counseling "revealed that 68 percent of respondents held negative attitudes toward discussing money with their fiancé, with 5 percent indicating the discussion would cause them to call off the wedding."
That's not good. Before you take a vow to share the rest of your life with your significant other, you should have the money talk to determine whether you're on the same page. Here's a list of topics that should be at the forefront of your discussion.
1. Share your philosophy on money
How do you feel about money? What are your thoughts on how financial affairs should be managed? You should also both disclose what you learned about money as a child to gain a better understanding of your respective views.
Perhaps you were raised by parents who were well off and you routinely live every day as if you had the income to support the lifestyle of your youth. If you fit the bill, marrying a saver could result in conflict. How will you work this out?
2. Chat about credit reports and scores
After you're married, you will continue to have your own credit file, but you may also share joint accounts -- like credit cards, car loans and a mortgage. If your partner has bad credit, that will negatively affect the interest rate you get on joint accounts.
Discuss why your credit scores are high or low, and how you can go about improving a bad credit score.
3. Disclose financial obligations
Is your money being spent in places that your partner is unaware of? Now's the time to come clean and discuss all arrangements, such as charitable contributions to relatives, child support or alimony payments.
Other outstanding obligations, such as auto loans, student loans and credit card debt, should also be disclosed.
4. Set goals
Do you have a list of short-term, mid-range or even long-term financial goals? Have you discussed them in detail with your mate? If not, put everything on the table and determine if you share common goals. At some point, the two of you will need to establish a set of your own.
If you're going to spend the rest of your life together, why not learn how to manage your money as a unit? Does one of you wing it while the other sits down each month and creates a detailed spending plan?
There's no way around it: A budget is an absolute must, or you may find yourself coming up short month after month or, even worse, with a mountain of debt.
Need a little help? Planning an affordable wedding is a great way to get started. After all, do you really want to spend the next five or 10 years paying it off?
6. Talk about children
The U.S. Department of Agriculture says the cost of raising "a child born in 2012 is $241,080 for food, shelter and other necessities over the next 17 years, which translates to about $301,970 when adjusted for inflation." Of course, there are ways to cut those costs.
That being said, are children in your plans? If so, have you developed a timeline and a plan of action to cover the costs associated with parenthood? Those figures above don't include college, by the way.
7. Plan for retirement
Assuming you're together for the long haul, retirement savings will eventually be an important source of income in your household. Do both of you participate in retirement plans at work? If not, make sure that the working spouse is contributing to an IRA for the nonworking spouse.
And while you're at it, it’s a good idea to look into life insurance policies, both private and employer-sponsored.
8. Will you have joint or separate accounts?
This potentially sticky topic should also be hashed out before you tie the knot. While a marriage is indeed a union of two parties, some couples decide not to combine their finances and to maintain separate bank accounts.
There are also cases where it's advisable to have a prenuptial agreement -- for instance, when one partner is substantially wealthier than the other and has other heirs to consider. It will also save you a ton of time and money in the event that you divorce and go your separate ways.
9. Share career plans
How do your career aspirations fit into the overall plans for the marriage? Perhaps one of you will take on a demanding job that will require the other to become a stay-at-home parent and rely solely on one income.
Or maybe you want to start a business, but may need to tap into savings to make ends meet during the startup phase.
Either way, money is involved and the topic needs to be discussed.
10. What's your backup plan?
When money gets tight in a marriage, fear or frustration can cause discord. That's why it's so important to establish and grow an emergency fund. What's an ideal cushion? What are the rules for withdrawing funds from the account?
More on Money Talks News:
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