Though the proposal season is still in full swing (usually until just past Valentine’s Day, which will see that largest uptick in proposals), many tens of thousands of Americans got engaged over the holidays during Christmas and New Year.
This is one of the most important moments in peoples lives other and they’ll often spend long months if not years planning for the big day. However, in all that planning many couples don’t take the time to talk about their finances. “The single biggest mistake couples make,” says Joe Buhrmann, Manager of Financial Security Field Support from COUNTRY Financial, “is they do not sit down together and do any financial planning before getting married.”
This is actually a very essential step that couples should take, especially if they’ve never spoken of finance before. When you’re about to enter a whole new period of your life where you’ll be sharing financial responsibilities, you should know how your partner spends as well as know about any outstanding financial problems. A recent COUNTRY Financial Security Index survey found that “only 54 percent of those who are engaged are in the know about their partner’s debt.” This can be quite a shock as more than two-thirds of Americans who are just dating or single say “they were unwilling to date or marry someone who has significant debt.”
It’s never to late to start talking about finance, in fact, the earlier the better! If you can develop a plan early, it can help prevent future financial problems and conflicts, as well as get a couple started on saving for the future. “If they need more help, they should reach out to a financial advisor who can get them on the right track, ” says Buhrmann.
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There are five essential things, according to that couples should discuss when they talk about their future financial situation together:
- Spending: How much money will you make combined? Will you rent or buy and how much can you afford to spend monthly on housing? What about food, clothing and utilities? After that, determine how much discretionary spending you each can do.
- Insurance: Consider what coverage you will need and how much you might pay in insurance premiums.
- Debt: Ask yourselves how much combined debt you will have. You’re marrying the love of your life, which also includes their outstanding debt and credit score.
- Saving: How much money will you save and how frequently will you save it? What items will you save for? (i.e. a down payment towards a major purchase, vacation, your first child, etc.)
- Retirement: Determine how much money would you need to accumulate to live comfortably in your golden years. Will you need to work? What might you get in Social Security benefits?
It may seem tough and many of us dread talking about money, but it’s an important part of how we live, especially how we live with a significant other. You may end of having differing views on how much to spend and save, which is why it’s better to have these talks before getting married.
Just remember that having an open dialogue, no matter how uncomfortable, is helping you to build towards a better future.