Have you planned a successful financial union? Do you understand the nitty-gritties of getting into a wedlock and the add on that come with a blessed engagement called marriage?
If the answer to above question is yes, we are happy that you have planned a successful Financial union but if the answer is no – We would like you to go through the basics as explained below and do the needful.
Apparently in urban set-up, marriage these days requires team work – and demand equal contribution from both the partners. Money can’t buy happiness yet you need money for your needs. Money is a major enabler. It is the closest thing we can exchange for happiness. To survive in this material world, it is as vital as oxygen.
Getting hitched??Before even you plan your wedding expenses, honeymoon the first thing to discuss is finances. It is sensitive, never easy or fun but essential.Money is the biggest cause of friction in a marriage. There is no “my” money, “his” money or “her” money in a successful marriage. Regardless of who does or doesn’t work or who brings the most money; the successful married pool their money together, plan together,budget together, give together, spend together and save together.
While talking to few of my friends for this blog, I asked one of my friend why the conversations on money are so difficult. What she said made me smile. She said conversations around money are not sexy that’s why couples are reluctant to talk. On serious note I think we tend to avoid money conversations before marriage because they come loaded with lot of tension and fear of being judged. It is even harder than the ‘birds and bees talk’ which most Indian parent shy away from having with their children.
Not sure where to start??
Couples can start with discussions on money values-respective upbringing, grow up poor? affluent? respective family’s attitude toward money. How did parents handle money? This can be a touchy conversation, but it can also be liberating and create a habit of communication. The first & foremost part is to do your homework about the financial goals and life goals and also to figure out – how you plan to proceed with it as a team.
1. List your goals.
Do you want to own a home? Have one or more children? Emergency fund? Future career plans? Start a business? Do you plan to send them to private or Government schools? College? Do you intend to retire? If so, when and with how much money in your piggy bank?…how you will blend your finances
2. Figure out what each partner’s role will be.
The person who’s more detail-oriented might do the budgeting, account maintenance and check writing. The one who’s more interested in investments can track your portfolio, do research and make recommendations.
Finally planning your wedding expenses and honeymoon.
All this will give you some clarity and enable you to enter your marriage with a better understanding about each other and what is important. Remember you are a team and you need to work together.So let us understand the essentialmoves to make, prior to getting married and talking finances with your chosen life partner.
Smart Financial Moves for Life Partners for a Solid Financial Foundation
3. Complete a financial fitness assessment.
Before you share your financial story with your significant other, you need to know exactly where you stand. Your financial fitness assessment should include important information about your current financial status. At a basic level, complete your net worth statement and review your recent expenses.
Once you are done with the above, create a spending plan so you can start proactively telling your money where you want it to go in advance. Some other important financial measurements include your savings ratio, debt to income ratio, and emergency savings. But a financial fitness assessment should also include a quick examination of your financial attitudes and confidence about your knowledge of money matters.
4. Create a debt reduction plan.
You don’t necessarily have to completely eliminate your credit cards or education loan debt to walk down the aisle with confidence. But it is recommended to at least have an action plan in place to do so as quickly as possible after exchanging your “I Dos”. Lot of Millennials delay getting married until they pay off education or personal loan. Bringing the baggage of debt into a marriage can be a major stressor on a couple. That’s why couples should spend time understanding each other’s current debt obligations. But instead of just identifying the potential problem, focus on establishing a debt reduction plan to deal with education loans, credit cards, car loans, or other obligations as quickly as possible.
5. Be sure to make time for money talk.
Many a times we don’t want to talk money fearing judgement. Money talk prior to getting married requires trust and honest communication. Just remember that this process is not designed to dwell on the past. It is a way to use the past to guide future financial decisions in your life together. But if some financial baggage exists, it is better to expose things early on so you can create effective solutions as a couple.
6. Schedule regular money talks.
Don’t stop with a one-time exercise. Make this exercise a regular event. This is the best way to avoid having your partner become your biggest financial enemy.
7. Assign roles.
Couples must assign roles to manage finances as a team. Figuring out how to consolidate accounts can be a challenge. Sometimes it helps to establish a joint savings account for expenses before getting married to set aside funds for the wedding or honeymoon. You also need to discuss how you currently handle day-to-day financial decisions. Are you a better long-term planner or are you well-organized and prefer to pay the everyday bills? This will help you start creating an initial game plan on how to consolidate accounts and whether it makes sense or not to keep separate accounts initially.
8. How will you make major financial decisions?
Will you have spending rules such as a 24 hour waiting period for purchase over a certain amount? Do you feel comfortable using credit cards for everyday purchases to receive cash back rewards or does the thought of using credit going against your financial belief system? Are you going to use automatic budgeting tools which are easily available on iTunes or Google play store?
These are all important decisions that need to be made before walking down the aisle. So, Honey let’s talk about money first before we decide on the engagement ring.
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