4 Steps To Get Your Finances On Track Before You Say I DO!


Finances are common reasons cited for divorce. Follow these 4 financial tips before you get married!

For couples marrying today, how to handle finances is a huge issue, and is the most common source of stress for couples and families. Historically, economics were an important reason for marriage, whereas today, finances are a common reason cited for divorce. Today, couples are marrying later and have already established their career and 401K's, plus have their own credit cards (often with debt), as well as student loans, all in their individual names. They are already used to controlling and managing their own money. If you happen to be marrying a second time, you may be bringing valuable assets into the new relationship. Thus, it is critical for couples to talk about finances before they marry, so that they have complete understanding of what each is bringing into the relationship.

To help get you and your partner off on a positive start, here are 4 action steps that you can take together before each of you say the words; "I do":

1. Evaluate Your Present Debt:  

The first step is to look closely at your present debt level. You may want to each make a chart that lists each of your individual debts, the amount owed, interest rate, monthly payment etc. Then, combine your two lists together in order to get a true picture of the debt you are bringing into your marriage. If you both feel comfortable with your present debt load, then great. If one or both of you have concerns, you may want to discuss how you think debt may affect your relationship. For many couples who are considering getting married, credit card debt and student loans are huge obstacles. Discuss together what steps each of you can take, as well as support one another on with respect to reducing your level of debt. You will need a realistic plan, not just a hope that your income will increase. A financial advisor can provide sound advice for your individual situation. What is most important is that the both of you discuss and evaluate your present debt.

2. Define Your Financial Goals:  

Whatever your approach to handling your finances and debts will be, it helps to have well-defined financial goals—goals that you mutually agree on. In setting financial goals and working to achieve them, it is important to bear in mind that it is possible to end up with all the things you would like to have, but absolutely no time to enjoy them. In a sense, we can have it all, and actually have nothing.  We are accustomed to instant gratification. If you are bored and have the right credit card, you can whisk you partner aware for a spontaneous romantic get-away weekend. Many problems in marriage could be lessened if we learn to delay gratification.

Another issue in defining your financial goals deals with career choices. Are you entering marriage with both of you dedicated to your careers? Dual careers do not have to become an issue if you take the time to talk about them before your get marriage. A majority of couples who are getting married today each work full-time, and this affects so many areas of living such as household responsibilities, financial decisions, where to live, parenting, and so on. When and if you decide to have kids, should one of you put your career on hold to take care of the children? If you are career driven, how will the time away affect your relationship with your future spouse and the time you will have for one another? Should you move for the benefit of one's career?

3. Develop A Workable Financial Plan:

The first part of a workable financial plan is to track how you are spending money. You will want to track both large and small expenditures. How often have you come to the end of the month and asked yourself, "where did all my money go?"  Besides meeting your current needs, budgeting helps with your financial goals. Before you establish a budget, it might be helpful to record your actual expenses.  Tracking how you both spend money for the next month or two (even before your get married) may help you understand your present spending habits. Also, consider expenses you may pay every six months such as property taxes, car, or life insurance. Your financial plan will need to be updated as your financial situation changes. Creating a spending plan is extra work, but the results will be worth it.

4. Manage And Monitor Your Money:  

"How are we going to handle our money once we are married?" is an important question to consider. If you have already merged your money, you may feel you have it all figured out—but the system you're using now may not continue to work as well once you are married. The basic question after marriage is, "will it be yours, mine, or ours?" One way may be best when you are just starting your life together as a married couple, and another approach might work better when and if you have children or different jobs, and so on.

It is important to keep in mind that there is no single correct way of handling finances as a married couple. How you feel about money and the managing of it is very individualistic. Also, at different stages of marriage you may handle your finances in a number of different ways. The real concern is not how many bank accounts you have (separate or joint) or even how much money you have, but that you have a realistic and workable financial plan that you both agree on.