You likely know your spouse extremely well if you are engaged. You have probably talked about your careers, homes, and children.
Many betrothed couples don't sufficiently address finances, though. According to a Policygenius poll from 2021, 1 in 5 couples never talk about money. 41% of people are unaware of their partner's income. It is essential to talk about finances before getting married because they frequently cause tension and arguments. So before getting married, consider the following money-related queries.
1. What is our total amount of debt?
Debt is just as important as assets. If your partner has student loans or credit problems, you certainly already know about them, but many couples are unaware of the specifics.
The majority of the time, you inherit your spouse's debt. Plans like paying for a wedding or a home could be impacted. Make a spending plan that enables you to pay off debt fast, or start by paying off smaller bills using the snowball method. You could also talk about avoiding previous financial blunders like excessive credit card use.
2. What are our financial goals?
The subject of money need not be dull. Discuss your aspirations and objectives. Your top spending priorities for the upcoming year, the next five, the next ten, and beyond should be listed.
Together, you may decide your spending and saving objectives by creating a budget. If you don't live together or have many shared expenses, you can always make the budget more detailed. The basic rule is 50/30/20. Spend 50% of your budget on necessities (bills, food, and shelter), 30% on wants (entertainment, vacations, and gifts), and 20% on debt and savings.
3. Do we plan to share accounts?
What you do with your money is just as important as where you store it. The president of Crescendo Financial Planners in Oak Brook, Illinois, Elizabeth Buffardi, claims that depositing money into regular bank accounts is simpler. Give it your all. Maybe a joint checking and savings account, but with distinct accounts that can be accessed by ATMs. While others struggle, other people can merge their money with ease. If one partner makes significantly more money, this may be challenging. Decide to talk right now.
4. How much can we spend without first discussing it?
Not only shouldn't your partner know everything, but they also don't have to. Keep your daily habit of two caramel macchiatos to yourself if it isn't too pricey. Budgeting is a good idea for expenses, savings, and bills. Set a cap on the amount you can spend without talking to one another.
5. What's our financial emergency plan?
Your money could one day be destroyed by a costly and unanticipated event. If you can, start a savings account. Money managers advise setting aside three to six months' worth of expenses. If you are unable to save money, talk to your partner about how you will address unforeseen expenses. This inquiry may sound uncomplicated, yet it might bring up important issues like debt, family borrowing, and budget cuts.
One can also talk about life insurance. Married couples who earn two salaries can afford expenses like a mortgage. If a partner passes away, life insurance can help the spouse.
Always have conversations about money. As your financial situation and goals change, inform your partner regularly.