June has long been a favorite month for weddings, but a recent study found September is now the number one month for marriages. That’s great news because it means, if you start right now, you still have time to take care of a most important task – and it’s not choosing bridesmaid dresses or tasting cake.
The most important thing you can do before you get married is talking with your intended about your (soon to be shared) finances. So grab a pencil and take notes, because here comes The Guide.
- Put all your (credit) cards on the table
Literally, sit down together with a list of your debts and have a frank discussion about how much money you owe. Share your credit reports, objective records of your financial history which show everything from missed loan payments to store credit cards you may have even forgotten you have. From a practical standpoint, reviewing credit reports gives you an early opportunity to correct errors or improve low scores before you get married (or before you apply for a first home mortgage). More importantly, reviewing credit reports is a good way to start a broader conversation about how you both handle money.
- Clean up debt
Only about 57% of couples know their partners’ credit scores before their weddings. That’s too bad because your partner’s bad credit can affect your own, and at least one of you needs a good credit history to begin your life together. If your partner has debt, avoid opening a joint account, cosigning on a loan or adding your partner as an authorized user. Together, work out a plan to pay down any debt.
- Create a budget
Figure out what you will owe, your combined income and what you will have left over each month. Develop a plan for paying bills and saving and spending money. Set a dollar amount that each of you can spend without having to discuss it with the other. Understanding your partner’s financial philosophy now may save many arguments later.
- List your priorities and goals
Write down what is important to you both. Do you want to own a home? Have children? Will they attend private school? Is it more important to save for the future, or travel around the world right now? Discuss what you want to work toward together. Over the years, your list may change along with your age, income or health; and that’s okay. Talking about your priorities now will not only prevent surprises in the future, you may learn something new about your fiancé to fall in love with.
- Get with the program
Use a bookkeeping program to help you stay on track. A personal financial management tool (PFM) such as FinanceWorks in the Delta Community Online Banking platform allows you to see, at a glance, where your money is going. A PFM can take some of the emotion out of managing money so you can clearly track your spending and make adjustments as needed.
- Manage your finances like a business
You wouldn’t expect a coworker to do all the work on a team project, and your partner shouldn’t have to either. Share responsibility for bookkeeping, but divide tasks according to aptitude and interest. The partner who is more detail-oriented might do the budgeting, bill-paying and account maintenance. The one more interested in investments might track your portfolio and research opportunities.
- Put it in writing
Create or update your wills, and put in writing where your assets are and how you want them distributed. Once you’re married, you can name your spouse as a beneficiary, the person who receives money and benefits if something happens to you. This applies to life insurances, 401(k) plans and any other benefits.
- Consider a Prenuptial Agreement
While you’re there anyway, ask your lawyer if you should consider a prenuptial agreement. If you were previously married, have children or have accumulated assets, a prenuptial contract may reduce future conflicts, protect separate property and support your estate plan.
- Keep it real
Commit to keeping a monthly “money date” with your spouse. Your financial situation, your income and even your priorities will change over time. Don’t wait for a big life event, like children or a new job, to discuss how you are progressing on your financial path.
- Talk to a professional
You may have a professional wedding planner, and probably a professional photographer for your (one) big day. You should also consider a professional financial advisor to help you through the years that come afterward. An advisor can help you define shared goals, such as private schools for your children, or early retirement. Once you understand each other’s priorities, an advisor can help you develop a plan to reach those goals.
Too many of us have been raised to never discuss salaries, our net worth or how much money we owe. These are some of our deepest secrets we keep even from those we love the most. But it’s important to get over the taboo of talking about money, especially before you commit to spend the rest of your life with someone. Whether you will be a June Bride or a September Spouse, it is a loving gesture that illustrates you’re in this for the long haul.