These Are the Topics You Have to Cover When Discussing First-Year Finances
It's more fun to talk about cakes and flowers, but money conversations are even more important.
When you get engaged, you're naturally laser-focused on the guest list, the dress, and the million other details that have to do with the wedding day. But being engaged is not only about planning a wedding, but also about planning a marriage. And one essential part of being married involves money. If you and your fiancé have never had an in-depth talk about salaries, savings, and spending habits, now's the time for an honest chat. Here are the topics you should focus on.
Your financial goals.
Start off discussing the big picture. You're likely still saving to pay off the wedding, but once that's done, what will your financial aim be for the next year? Five years? Ten years? Maybe one of you wants to save for a down payment on a house, and the other wants to save for luxury vacations. Figure out if you can do both or concentrate on achieving one goal at a time. The important thing is to plot a course of action together.
Merging money or not.
Will you keep separate or joint bank and investment accounts, or a combination of both? A popular way to handle this for many couples is to have a joint account for household expenses and separate accounts for personal spending.
Saving and spending habits.
Does one of you squirrel away every extra dollar? Is the other one helping to keep high-end shoe designers in business? Be honest about your personal habits and how you each feel about the other's, especially if they're very different from one another. You may want to make an agreement about how much you each can spend on personal expenses and big-ticket items without the other's approval.
You may not have shared this information before you got engaged, but now that you're going to be a family, it's time for the big reveal. Make sure you're both entirely aware of what the other is bringing home.
What you own.
Get it all out in the open-how much you have socked away in savings, investments, and retirement accounts, such as a 401(k). Include your checking account, real-estate holdings, pension accounts, and any other assets.
What you owe.
This may be awkward but you shouldn't keep any secrets (financial or otherwise) from your almost-spouse. Be upfront about your debts, which may include credit cards, school loans, and mortgages.
Make a list of each person's income, assets, debts, personal spending (the gym, medications) and joint expenses (housing, utilities, transportation, groceries). Then create a household budget. It should cover not only expenses but also savings and emergency-fund contributions.
Figure out how you'll handle paying the bills. Will one of you be the designated payer or will you share the job where you each pay certain bills every month? Whatever you decide, both of you should be kept in the loop, so go over bills together once a month.
What to do with any extra money.
If getting married means you'll have some extra cash every month (because, for example, you're paying one rent or mortgage now instead of two), discuss what you'll do with the extra dough. Some things to consider: paying off credit cards or increasing your 401(k) or IRA contributions.