Congratulations on your engagement! Now that you're planning your wedding, it's also time to build a strong financial future for the rest of your marriage. This won't happen unless you have a honest conversation about your finances as well as any financial goals you want to set together. Here are 10 crucial money talks you must have with your fiance.
1. Your Beliefs About Money
This is one of the most important things to discuss when creating new financial goals. Is your partner someone who has a long-term mindset when it comes to money? Are you interested in investing as much money as possible to retire early and travel often? What are your beliefs about debt and using credit cards?
2. How Much Debt Do You Have?
Since debt affects the quality of life in your home, it's vital that you discuss your current debts and develop a plan for eliminating them after you get married. Look over each other's credit reports and discuss them.
3. Discuss Your Income, Savings, And Assets
Another thing you should do is discuss each other's income, savings, and assets. Are you satisfied with your current income or would you like to increase your income within the next few years? How do you plan to advance your career or business in order to increase your earning potential? What are your long-term saving and investing goals? Are you currently saving for retirement?
4. How Will Financial Responsibilities Be Allocated?
You also want to discuss who will handle the main duties of paying the bills and managing the monthly budget. This doesn't mean that one partner will control all of the finances in the marriage. It just means that one partner might oversee the daily management of household finances.
5. Create Solid Long-Term Financial Goals
Both of you should discuss a long-term financial plan for your marriage. How soon do you want to retire? If you plan to have kids, will you save money for their college education through a 529 plan or will you open a custodial brokerage account for them? What are your travel plans as a couple? Do you plan to buy a home right after getting married?
6. Joint Or Separate Bank Account?
There are pros and cons to both joint and separate bank accounts for married couples. One benefit of a joint account is that it simplifies your finances as a couple, and this helps when you work on the budget together. A disadvantage of a joint account is that occasional disagreements occur regarding how the money is spent. With a separate account, you could protect any assets that you had before entering the marriage. A disadvantage is that it makes managing finances tricky at times.
7. How Did Your Childhood Affect Your Views On Money?
Our views on money are often shaped by our parents and extended family members, so this is something you should discuss before marriage. Did your parents spend money carelessly and were not responsible with credit cards? Did your partner's parents practice extreme frugality and as a result, your partner still doesn't like to spend excess money on things?
8. Support For Aging Parents
If you and your partner's parents are elderly or disabled, you need to discuss how you will support them financially when they can no longer care for themselves. Will you let your parents live with you or will you place them in a nursing home? How will you pay for home health care if the need arises for it?
9. Estate Planning Discussion
Although you and your partner might live a long life, this pandemic has shown us that there are no guarantees and that estate planning is important. Talk about how you will create your estate plan in the event one or both of you passes away before the children. Discuss life insurance, writing a will, and establishing a living trust if you will accumulate a lot of assets in the future.
10. What Will We Teach Our Kids About Money?
You and your partner should think about leaving a strong financial legacy for your future children, and financial literacy is the best financial gift you can leave them. Discuss which money lessons you believe are the most important for your future kids to learn and why.
Marriage is a wonderful thing, but it is never wise to not discuss finances before you say "I do." When you and your partner have a solid financial plan in place, there will be harmony and calm in your home regarding money.