It can be exciting to begin your new life together with your partner. But before you say your “I dos”, there’s something that both of you must vow to do: consider your finances.
It’s no secret that money is one of the main causes of disputes in any relationship. To steer clear of disagreements down the road, you must strive to establish a solid financial foundation from the get-go.
In this article, I’ve compiled a couple of tips to help you and your spouse-to-be brace your finances for the future. Discover 6 money moves to make before you say “I do”:
6 financial moves to make before your big day
Before you say your vows, there are a few money-related matters you need to tackle with your spouse-to-be:
1. Share your current financial situation
Sit down with your partner and have an honest conversation about your finances. Lay it all on the table, including how much money you have in your bank account, your investments, your credit score, your debts, and more.
Marriage often means combining your finances, and with that, your financial baggage. Therefore, both of you must be fully aware of each other’s money habits and situations from the start.
This isn’t to say you should call your wedding off if your sweetie has limited funds. This conversion is merely designed to align you two, allowing you to plan realistically for your future and face your financial challenges as a team.
2. Reduce your debts
Once you’ve come clean about your debts, promise your partner that you’ll try to pay them off—even if not fully. Remember that once you tie the knot, your debts will be your spouse’s debts, and the other way around.
If you bring a substantial amount of debt into your marriage, your partner may feel burdened by it. Plus, they may feel like they’re in an unfair situation, especially if they have minimal debt or none at all.
Debt can put a strain on your relationship, so try to pay off 50% of your total debt before your day of “I dos”. For instance, if you have $25,000 in student loans, do what you can to tackle half of it now.
3. Spend realistically for your wedding day
It’s normal to feel torn between going all out for your once-in-a-lifetime wedding, or being frugal because it’s just one day. There’s no right or wrong, as your wedding budget will be based on your ability to pay for it.
It’s crucial to use your money realistically and to consider loans only as a last resort. While borrowing money for your wedding may be the norm, make sure it doesn’t get in the way of your long-term financial goals.
Pay with cash when you can, and use your credit card sparingly. Before locking down certain wedding details, explore every alternative. For example, instead of jewelry that will break the bank, why not buy an affordable engagement ring that’s just as beautiful? That way, you can have a memorable day without compromising your monetary well-being.
4. Discuss how you’ll use and manage money down the line
Get on the same page as your partner when it comes to how you’re going to use your money. Even if you feel like you’re a match made in heaven, there may still be a gap between your money goals.
One of you may want to put it into passive investments, while the other may want to pool it to save up for a home. As a couple, you should be respectful of each other’s plans and map out how you can fulfill both of your ambitions.
Along with discussing where your money will go, ask each other critical questions like, “Are we open to paying with credit?” and “How much money should we set aside for our wants?”. You should both be comfortable with how you use your money.
5. Consider a prenuptial agreement
I know it can be a bit odd to think about divorce when you haven’t even tied the knot yet. But in these times, it would be wise to get a prenup, especially if you own significant assets you want to protect. A prenup is an agreement that a couple enters into, outlining how their premarital assets will be distributed in case they get divorced.
It’s a common misconception that prenups are only for wealthy people. The truth is that they do more than safeguard your assets—they also set clear “guidelines” for you and your fiancé. A prenup can outline who’s responsible for which debts, whether incurred pre-marriage or during the marriage. If your spouse has poor spending habits, a prenup may be able to free you from the responsibility of taking on their debts. (However, do note that the laws vary, so it’s best to consult with a lawyer).
6. Commit to creating an emergency fund
Some nearlyweds would rather not contemplate the stressful situations that lie ahead, however, it’s only realistic to do so. For example, one of you might get into an accident, become disabled and need round-the-clock care, or be criminally charged. While no one wants these things to happen, they can happen, making it crucial to set up a separate emergency fund.
Wrapping up
Before you embark on your life together, bookmark this guide and commit to going through each item mentioned. That way, you can get on the same page, ensure that you start your marriage off with sound finances, and set yourselves up for a financially sound (and stress-free) future.
For more tips on money, couple finances, and more, check out our blog.
