Let’s Talk About Finances, Dear
So, you're getting married. Congratulations on your upcoming wedding! You’ve booked a venue, auditioned the band (or hired a DJ, so you can save for something bigger, like a home), and you’ve dusted off your passports for the honeymoon. The save-the-dates have been sent, and Aunt Marge can’t wait to be there (and Uncle Hal has promised to keep an eye on her, so she doesn’t do what she did at your sister’s wedding, because that was super awkward). You’ve discussed your hopes and dreams with your spouse to be, and you may even know exactly how many children you want. But have you talked about how you’ll pay for their college educations? Or what kind of home you'll need to house that brood (and how you'll pay for the renovations to make it possible)? Or how you’ll pay for everything else you need and want? It’s time for a chat.
Here's what you should discuss.
Debts and income
What debts do you both have and how are you planning on paying them? What are your feelings about debt? For example, do you think a car loan is just fine? Your life partner to be may disagree. Don't make any assumptions, and discuss everything in detail. Your normal and your partner's normal might be on opposite ends of the spectrum.
What’s your credit score?
When you decide to buy a home, this information will be useful. Though you can apply for a mortgage together, you may get a better rate if you apply in only one name, the partner with the higher credit score. The deed can still be in both of your names. Also, knowing your partner's credit score, and letting her or him know yours, will give you some insight into each other's financial histories. If the score is low, why?
What’s your financial philosophy?
Do you take risks for a potentially higher yield on investments, or do you play it safe to protect what you have? You'll be in this together, and it's important to have a plan. How you handle money is very personal, and you'll need to see eye to eye on the big decisions, and plenty of the small ones. You'd be surprised how important one person will think it is to get holiday gifts anyway, even though you're paying off student loans and trying to save for a down payment.
How much fun money do you need?
Some people are willing to forgo a little fun to buy a bigger home. Others want a smaller, manageable space, with some funds left over to travel, buy shoes, or enjoy more meals out. How much WAM (that would be "walking around money," according to one pawn shop commercial on late night tv) do you need? How will you allocate your funds, and how much control will each partner have over their own funds. If one of you buys something for $50, do you need to tell the other one? How about $500? How about a boat or a horse?
How do you like to spend your fun money?
Pro Tip from a Wife of 18 Years: As long as your partner isn’t spending too much, don’t question where the money goes. One man’s concert weekend with friends is another man’s...er, woman’s...new bag for fall. or the aforementioned boat or horse. Though you share finances, you don't do everything together and, as long as the bills are getting paid and you've agreed on a savings plan, you should each be able to spend on some things that only have value to you.
How will you pay the bills?
Joint accounts or separate? And who will be expected to contribute what? Will you sit down together once every two weeks and pay them together? That can be helpful at the beginning of a relationship, so each of you is aware of everything that needs to be paid every month.
How many kids do you want?
And how will you pay for it all? So, you probably won’t be able to pick a number, but you can talk about how you feel about paying for their education, whether you’ll save for it, expect the kids to help, or pay down your mortgage, in case you need to use home equity to finance college. When you actually start trying to have a baby, you may have to have another conversation, about how you'll pay for fertility treatments, help at home during and after your pregnancy, adoption, or any of the other possibilities.
How do you plan to retire?
What are you saving already? Can you stay in your home as you age? Or will you downsize or move to a retirement home? This may seem a long way off, but talking about it now will give you insight into each other’s views on finances and life goals.
This can be a tough conversation, so try to make it more fun. Have a fancy date night in and cook up a great dinner. Crack open a bottle of wine and try to be relaxed through all of it. Talking now will help you avoid unpleasant surprises when you try to buy a house, take a big trip, or file your first round of joint taxes. Start your marriage on the right foot by communicating now, and make it a habit!