Congratulations on your engagement! Starting your new life together is undoubtedly thrilling. However, before you exchange vows, there’s one crucial promise you both need to make: the commitment to address your financial situation.
It’s no secret that money can be a major source of conflicts in any relationship. To avoid future disputes, it’s imperative to lay a strong financial foundation right from the start.
In this article, I’ve compiled a set of recommendations to help you and your future spouse prepare your finances for the journey ahead. Here are six financial steps to take before saying “I do”:
6 Financial Moves to Make Before Your Wedding Day
Before you take your vows, there are several financial matters you should discuss with your soon-to-be spouse:
- Open Up About Your Current Financial Situation: Sit down with your partner for an honest conversation about your finances. Share details like your bank account balances, investments, credit scores, and debts. Marriage often involves merging your financial lives, so it’s crucial to be fully aware of each other’s financial habits and situations from the start. This isn’t about calling off the wedding if one of you has limited funds; it’s about aligning your financial expectations and working together to overcome challenges.
- Address Your Debts: Once you’ve disclosed your debts, make a commitment to work on paying them down, even if it’s not possible to clear them entirely before the wedding. Remember that once you’re married, your debts become shared responsibilities. If you bring substantial debt into your marriage, your partner may feel burdened. Aim to pay off at least 50% of your total debt before your wedding day. For example, if you have $25,000 in student loans, work on reducing half of that burden.
- Plan Realistically for Your Wedding: It’s natural to grapple with the dilemma of splurging on a once-in-a-lifetime wedding or being more budget-conscious because it’s just one day. Your wedding budget should align with your financial capacity. Prioritize using your funds wisely and resort to loans only as a last resort. While borrowing for a wedding is common, ensure it doesn’t jeopardize your long-term financial goals. Pay with cash when possible, and use credit cards sparingly. Before finalizing wedding details, explore alternative options. For instance, consider purchasing an affordable engagement ring instead of an extravagant one to ensure a memorable day without compromising your financial well-being.
- Discuss Your Future Financial Management: Ensure you and your partner are on the same page regarding how you’ll use and manage your money. Even if you’re deeply in love, there might be differences in your financial goals. One of you may prefer passive investments, while the other may want to save for a home. Respect each other’s plans and map out strategies to achieve both your aspirations. Discuss critical questions like, “Are we open to using credit?” and “How much should we allocate for discretionary spending?” Both partners should feel comfortable with your financial management approach.
- Consider a Prenuptial Agreement: Although contemplating divorce before marriage may seem unusual, in today’s world, it’s wise to consider a prenuptial agreement, especially if you have significant assets to protect. A prenup outlines how premarital assets will be distributed in case of divorce. It’s not just for the wealthy; it also provides guidelines for you and your fiancé. A prenup can clarify responsibility for pre-marriage and marital debts. If your partner has poor spending habits, a prenup might protect you from assuming their debts. Laws can vary, so it’s advisable to consult with an attorney.
- Commit to Building an Emergency Fund: While nobody wants to think about worst-case scenarios, it’s a realistic consideration. One of you could face an accident, disability, or legal issues, necessitating significant financial support. To prepare for unforeseen circumstances, establish a dedicated emergency fund.
In conclusion, before embarking on your life together, ensure you address each of these financial considerations. By doing so, you’ll align your expectations, set the stage for a strong financial foundation in your marriage, and pave the way for a secure and stress-free future.
