Massive amounts of time are spent on planning for a wedding and sometimes little attention is spent on planning for what happens after the wedding— the actual marriage. One largely neglected area is money matters.
Couples often have very different attitudes toward money and do not know it. Avoid this trap—don’t wait until after the honeymoon to begin discussing your future finances. Rather, make the subject of spending and saving a priority before you walk down the aisle. If you are having a hard time coming to an agreement, maybe your financial advisor can outline options not yet considered and help bring the two of you to a resolution.
Here are a few areas to help spark a discussion on money matters:
• Financial personality. Are you a saver or a spender? Do you live from paycheck to paycheck? Have an honest discussion with each other about spending and saving habits to help determine how it might affect your relationship going forward.
• Credit history. How much debt are you bringing into the relationship? Ask questions so there are no surprises when the two of you make big purchases like an automobile or a home. You may want to research options for consolidating debt. In many instances, the opportunity to transfer debt from higher-rate sources to a lower-interest, fixed source will allow you to save money in the long run. Additionally, consolidation enables you to make only one monthly payment to one source versus multiple creditors, freeing up valuable personal time.
• Working toward common financial goals. Develop a plan together to achieve your common financial objectives. If you receive cash from your wedding, what will you do with it? Are you saving for a home? If you are planning to have children, what savings plan will you have?
• Discuss everyday money matters. Who will keep track of monthly statements and bills? Should you open a joint checking account? Many banks today have a variety of checking account options to solve your banking needs with the account most appropriate for your situation. Some typical checking account options include:
Regular. A checking account that allows you to maintain a low minimum balance and offers you unlimited check privileges.
Interest. An interest-earning account offering that provides a competitive interest rate on weekly balances in your account.
Package. Some banks are now offering added benefits for consolidating your relationship by offering “packaged accounts” that include many of the services you use most often (such as online banking, online bill pay, access to non-bank ATMs and discounts on other services). As a result, packaged accounts may help you simplify your life and worry less about fees while saving money with better rates on checking, savings, loans and investments.
In each instance you will want to determine if the account should be joint or separate. Many couples chose to do both and have one joint account along with separate personal accounts.
Talk with a certified financial advisor and/or your banker because they can offer guidance to help you reach your financial objectives. The advisor will probably discuss short-term and long-term saving options, investments, retirement, IRAs and 401(k) plans. Remember no matter what your income level is, there are savings options available. The two of you can start with a simple saving plan if that is more comfortable. However, you should develop a plan and begin saving earlier rather than later.
A newly married couple can work together to make better, more informed decisions that affect their financial picture. Remember the goal isn’t to change the person, but rather, set joint priorities and goals. tpw