Recently engaged? Congratulations! You’ve got a long and exciting road ahead, and no doubt, a to-do list of wedding planning that’s even longer.
But before you get too caught up in all the fun of being engaged, take a minute to sit down with your spouse-to-be for that all-important money conversation. While finances aren’t exactly the most romantic topic to talk about, having the discussion now will ensure you’re both on the same page and ready to walk hand-in-hand down the aisle and into a financially healthy future.
Here are five key questions for the newly engaged, to help kickstart the money conversation with your partner:
What Are Our Priorities?
Discussing and defining your financial priorities, as individuals and as a couple, is the first step to building a collaborative financial life. As a couple, will you prioritize saving for a home, or a new car, or for the future costs of having children? When it comes to spending, what big purchases do you anticipate making in the near future, and how do these line up with where you and your future spouse want to be, financially speaking, in the next five years? Your priorities as a couple may be affected by the debt situation and credit score of you or your partner. Be open about what you owe for school loans, credit card bills and so on; and share your credit scores with each other.
Will We Merge Finances?
There’s no right or wrong way to do things when it comes to merging finances as a married couple. Traditionally, spouses would operate from a joint bank account; but today, many couples choose to maintain individual bank accounts – especially if they both work outside the home. Another option is to open a few different savings and checking accounts based around your needs as a couple and a household. For example, you might have a joint vacation savings account, a joint checking account for paying household bills, and another long-term joint investment account linked to retirement funds.
How Are We Paying for the Wedding?
The average cost of a wedding hit $33,900 in 2019, but prices can easily swing above or below that number depending on what you want from your big day. Of course, COVID-19 has also changed the landscape of what a group gathering can look like, which might affect your planning. What’s most important is to make sure you and your partner are on the same page about how much you’re willing to spend and who will be covering the costs. You should also discuss if you’re willing to take on debt to pay for your wedding, i.e. by putting some portion of the wedding spending on a credit card.
Can We Afford Our Long-term Goals?
A conversation about money can look very similar to any other conversation between engaged partners about your shared long-term goals. Are kids on the table? How about buying a house? What happens if one of you wants to go back to school? When you start outlining these plans and expenses early, you’ll have a much stronger shot at being able to afford them. Talking about long-term savings goals is also a great opportunity for newly engaged couples to discuss the “worst case scenario”, like someone losing a job. How will you handle this situation as a couple and still move forward on your long-term goals? Don’t wait until marriage to have the tough talks.
How Will We Continue to Budget Together?
The money conversation for newly engaged couples is important, but it’s by no means a one-time discussion. You and your spouse will need to continually work as a team to create and stick to budgets, pay down debt, and save for big expenses. Decide on a budgeting tool that works for you – whether that’s a spreadsheet, a mobile app, or pen and paper you keep in a kitchen drawer. Figure out a system in which compromise is king, but each person feels comfortable asking for what they want and need from the family finances. Of course, another big benefit of budgeting together is that you can support one another to plan ahead and stick to your money goals, which means a more financially healthy future for you both.