Originally published February 2019
Updated February 2023
It’s February again, and lovebirds all over the United States are preparing to celebrate with flowers, candy, and maybe even a beautiful engagement ring. It’s easy to get swept up in the romance of getting married, and planning a wedding can be one of the most fun and joyful times in a person’s life.
But before you light the unity candle, say “I do,” jump the broom, or break the glass — make sure you’ve done your financial homework together.
If you go through pre-marital financial counseling, you’ll learn that effective communication is one key to a healthy relationship.
The sooner you learn to talk openly and honestly about money, the better.
Some couples struggle with where to start and how to structure the pre-marital financial conversation. Learning about your intended’s goals and priorities is a good jumping-off point. After that, you’ll need to get into the nitty-gritty of what you each own, what you each owe, and your credit.
Start your conversation by asking a simple question of each other: “What financial goals are important for us to achieve in the next 3 years, 15 years, and 30 years?”
Those goals might include buying a home, starting a family, saving for kids’ college, paying off debt, starting a business, or saving for retirement.
It’s vital for you to know what matters to your spouse-to-be (and vice versa). If you don’t know where you’re headed, how will you work as a team to get there?
You’ll likely realize that you are not on the same financial page in all respects — and this is where loving, open, and honest communication will be important.
Will you have to put a dream on hold so debt can be paid off? Will you need to adjust your ambitions for that huge house in the suburbs? Will it take longer to pay off your student loans than you anticipated? Is there a goal that really matters to him or her that wasn’t even on your radar?
Work as a team to narrow down your short-, medium-, and long-term goals to a list of financial goals you both can agree on.
When you marry, you’ll share more than a life, home, family, or name. You’ll also share each other’s income, assets, debt burden, and (to some extent) credit scores.
Now is the time to share with your intended what you own, what you owe, and how creditworthy you are (or aren’t).
The process of sharing information about assets generally doesn’t lead to too many nasty surprises. Just make sure you tell your spouse-to-be the nature and approximate value of what you own, including bank accounts, retirement plans, real estate, and business interests.
When it comes to pre-marital financial disclosure, we tend to find more unpleasant surprises on the debt side of the balance sheet.
Where there is debt, be prepared to disclose the identity of the creditor, the outstanding balance, the minimum monthly payment, the expected payoff date, and the interest rate.
If either party’s debt is significant, you’ll need to work as a team to develop a plan for paying it off. Once again, pre-nuptial and post-nuptial agreements may help protect you in the event that your marriage ends in divorce.
Lastly, discuss your credit scores. Most banks and credit cards now offer credit monitoring and will show you your credit score on request.
If you don’t know your credit score, now is a good time to find out what it is. Why? Most major short-term goals for newlyweds (like buying a home or a new car) require a decent credit score. If only one of you has a good score (or neither of you has a good score), find out now so you can plan to build up your credit over time.
Most people cringe at the idea of talking about money.
Some women may have even been taught that they are bad with money and that the best thing to do is to let their spouse handle the finances completely.
But buying into the idea that money is taboo or only one spouse should handle the money is likely to set you up for disappointment and distress.
By following these tips, you’ll instead be prepared to communicate openly, honestly, and lovingly about money. There are plenty of things to disagree about in marriage — don’t let money be one of them.
Are you ready to make a Financial Plan for your new family?