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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 found 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 a significant other, you should have the money talk to determine whether you’re on the same page.
1. Share your philosophy about money
How do each of 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 so you can 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 fact 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 of which your partner is unaware? 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, you will need to establish such joint goals.
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, find yourself 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 off all those costs attached to the big day?
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 in half.
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.