Things to Discuss about Money before the Wedding

Preparing to get married is an incredibly exciting time. It’s also a time of great hope for the future. Discussing money matters at this time may seem very unromantic but by avoiding these issues, you risk that hopeful future. Before you walk down the aisle, there are several money issues you need to deal with.

Spending Styles:

Different people spend money differently. You and your partner need to discuss what your particular spending styles are. If one partner is very responsible with money and the other lives on their credit cards, their spending styles are clearly very different.  Partners with extremely different spending styles may end up clashing over money because each person may end up frustrated with the other’s spending habits. Similarly, if you have two people who are very irresponsible with their money, it could be a recipe for disaster.

To deal with this before the wedding, each partner should write a list of monthly expenses and income. Also list how you use your disposable income. This should give an idea of each partner’s spending habits. If your spending styles are very different, sit down and talk through compromises each partner can make so as to avoid frustration later on. E.g. One partner that believes annual vacations are a waste of money that should be saved and the other believes that annual vacations are an essential ritual. Both partners can meet halfway here. Take a shorter, less expensive vacation.

Financial Goals:

What are each partner’s specific short-term and long-term financial goals? Do both partners share the same goals? E.g. One partner wants to be able to vacation overseas every year and the other wants to pay off the mortgage in 10 years. Should the financial goals not mesh, each partner needs to explain why these goals are important to them and see where they are willing to compromise.

It is also important to set realistic, shared goals that you, as a couple, can work towards. Then work out a series of steps which will help you achieve these goals. It is important to have a shared vision when it comes to financial security. You should discuss what types of debt you will utilize and what types of debt reduction strategies you’ll utilize. You will also want to discuss how you’ll fund major expenses like houses, cars and college funds.

Individual or Joint Bank Accounts?

A good way to go is to have a joint account for household expenses, a joint savings plan and then individual checking accounts for each partner. This way each partner has some independence but both are working as a team.

Who Pays for What?

If both partners are earning roughly the same amount, it’s simplest for each to contribute half the living expenses. If one partner is earning substantially more than the other, or if one partner has a lot more debt, it may be difficult to decide this issue. If one partner ends up contributing the bulk of the living expenses, it can lead to resentment down the line. It is best to try and keep things as even as possible.

What about Debt from Before the Marriage?

A marriage should be a clean start and loading up your partner with your debt is simply not fair, even if they are willing to help you out. If they end up shouldering more than their fair share of the living expenses because of your debt burden, you need to actively ensure that that burden decreases as quickly as possible. This means not incurring more debt and finding ways to increase your income to help pay off your debt.

How do we Spend Our Money?

Once married, how will you spend your money? Will you consult each other before making major purchases? Major purchases should be something discussed by both of you before being committed to, especially if you’re using money from your savings account. It may be wise to have the bank set up your savings account so that both of you have to consent to money being withdrawn.

How will we Invest Our Savings?

Both partners need to be on the same page here. If one person is more risk adverse than the other, each partner again needs to come to some sort of compromise to make this work. Look back at your financial goals to see whether the money needs to be kept fairly liquid or can be put away for longer. Have a selection of investments – a short-term savings for emergencies, a longer-term investment for better returns and a retirement plan.

The Contingency Plan:

This needs to be discussed in case something goes drastically wrong. What if one or both of you lose your jobs? What kind of cash reserves do you have? What kind of reserves can you start building now?

All in all, speaking about money before the wedding may seem terribly unromantic but it is one of the best things you can do to save your marriage.