Money conversation before marriage is an important step you need to take if you are ready to take on the next step with your partner. But what do you talk about?
You might even think that this is not really that important and what matters is that you love and trust each other. Those are crucial characteristics in any relationship but so do your finances. They are a crucial component in any relationship. It should not be taboo to talk about money especially before you decide to tie the knot.
Now, more than ever, you need to be on the same page when it comes to your finances. You never know when emergencies will happen. Love will not be enough to get you through some of the most difficult financial situations in your marriage. You need to have a plan in place to make sure that you are able to get through the financial challenges that come your way.
This is why money conversation before marriage plays a big role in how you prepare your marital finances as a couple. You cannot rely on one person to do this. Just because one of you is better at managing money does not mean that person will shoulder all the responsibility. You both need to have a part in it.
Now that you see the importance of having this talk prior to marriage, now comes the next question – what do you talk about? This is important as the CDC shares how more than 2 million people got married in 2018. Your finances cover a wide range of topics. From student loan debt to credit card use and even your credit score. If you are serious about this conversation, here are a few pointers to help you get started.
How do you feel about debt?
Money conversation before marriage should include how you both feel about debt. This is a difficult topic but one that you need to talk about. You cannot avoid it and you will have to take on debt as you mature through your relationship. There will be times where you need it to help you realize your long term goals.
But that is not your license to simply take on debt whenever you want. You still need to approach it with caution. This is where you need to figure out how each of you feels about taking on debt. Do you dive in headfirst without thinking about your finances? Or do you step back and weigh all your options before taking out a loan?
Once you do have debt, how do you approach debt repayment? Is it a priority or are you comfortable in making minimum payments? Having debt obligations does not automatically mean you are bad with money. You need to factor in the reason why the loan was taken out and how the repayment is going along.
What are your long term goals?
Once you have covered the challenging topic of debt, money conversation before marriage could include long term goals as well. A lot of times, debt is just a necessary tool you use to help you reach your goals. Take a student loan for example. Most people use them to simply fund their way to college. The cost of attendance is not something a lot of people can simply pay out of pocket.
Taking on debt needs to be a calculated decision. Yes, it will put a strain on your income especially if you are just both starting out from college. You have student loans and credit card debts to think about. Not to mention rent and car payments if you have an auto loan. But even with these, you need to have goals you aim for.
It could be getting post-graduate units to get better opportunities at work. Long term goals could include buying a house to raise a family. It can even be putting up a business in the near future. Whatever the goal is, you need to be transparent with it. This helps put you on the same page. It will also help you both identify areas how you can support each other.
Can you live within a budget?
If you are paying down debt and you have long term goals, you both need to make sure that you are comfortable living within a budget. It could feel restrictive for some people and might seem like you are unable to live and enjoy your life to the fullest. But this is something you need to make sure you can manage your funds well.
This is why money conversation before marriage needs to include how each of you feel about a budget. You may not feel the same way about it and that is totally acceptable. Your goal is not to force your belief on each other. What you need is to find a way to work together despite your differences. This makes it all the more important to talk about it before getting married.
You get the chance to iron out your differences and work in a common approach. It also gives you the opportunity to identify each other’s strengths and weaknesses. This allows you to maximize each other’s strengths in reaching your financial goals. It can also give you the ability to help each other out in areas you need the most help.
It might sound taboo but money conversation before marriage needs to include discussions about your credit scores. It helps to know that the average credit score in 2020 went up to 711 according to Experian. A lot of financial information can be derived from that 3-digit number. It can show you how good, or bad each of you has been managing your finances over the years. However, talking about it can help you understand each other better especially when low scores are involved.
There are times when a low credit score is a result of going through challenging times. Just like the ongoing health crisis. It is possible that people have emergency funds but they were just not enough to cover their needs. This could be the reason why their credit scores are lower than what they used to be in the past.
This is why it is important to talk about this before you get married. It lessens the chance of misunderstanding and confusion when you finally need to look into each of your credit scores. If one or both of you have low scores, getting ahead of the problem can give you enough time to improve on it when you need it in the future.
Your money conversation before marriage should also touch on your saving habits. It is not enough that you want to save or that you save from time to time. You need a concrete savings plan. How do you feel about saving money? Is it something you think about after all the bills are paid up? Or do you prioritize it even before paying bills?
The habits you develop in saving money go side by side with your long term goals. It forms a crucial part in helping you succeed and achieve your future goals. It can be retiring at a certain age and even buying and paying off your house within a specific number of years. This is why you need to talk about your saving habits because it has a direct effect on how you reach your life goals.
Money conversation before marriage is an important step in making sure your relationship is off to a great start. You need to make sure that you are transparent with your finances before you get married. This will set you off on the right path. It helps identify areas you need to work on as a couple. This can also show where your strengths are in financial management. Bottomline is that talking about money early on lessens the chance of surprises.