Although it’s ideal to have money conversations with your partner prior to walking down the aisle, things don’t always happen the way they should. Whether you’re engaged, newlywed or years into a blissful marriage, below are 7 Money Decisions you and your partner need to make to set yourselves up for financial success:
1. Will we keep separate bank accounts or combine? There’s no rights or wrong when it come to merging or keeping separate accounts. What matters most however is that you’re organized, honest and working as a team. Check out my post To Merge or Not to Merge for more information on each option.
2. Will we handle existing debt brought into the marriage individually or work as a team to pay down? Again, there is no right or wrong here – just communication and organization around whichever option you choose. If you remain responsible for your own debt, will you also maintain a separate account to cover the bills? How much of your pay will you have leftover after household expenses to cover the payments? How does your debt affect your progress towards other goals?
3. What are our financial goals? When it comes to setting goals, I always encourage them to be S.M.A.R.T. (Specific, Measurable, Attainable, Relevant and Timely). I recommend couples sit down individually to work out their list of goals and rank them by priority. Then come together for a conversation and work as a team to prioritize and create a that make the most sense for you as a couple. Is it debt pay down? A new car? A down payment? A European vacation? Make sure these goals reflect your needs and values.
4. What is our monthly budget? How much can we afford to save and what do we have left over for discretionary expenses? Understanding how much you’re bringing in, what’s going out and where it’s going is essential to setting yourselves up for financial success. Having parameters around your spending and a plan in place to reach your goals is key. If you need more insight on how to get started with a spending plan, check out my post on Back to Basics with the “B” Word.
5. How are we going to manage our finances? Will you pay for items using debit cards, credit cards or cash? How often will you pay off credit cards? Will you pay bills as due or automatically? Who will be responsible for tracking? Making the decisions early on regarding what works best for your marriage and household will ensure you are on the same page and sets the stage for conversations if things need to change.
6. How often will we sit down to talk about finances? While I recommend monitoring spending on a weekly basis as you get started, at a minimum I suggest scheduling monthly money dates with your significant other. It helps to get it on the calendar for the same date and time each month and to even have an agenda to go along with it. Review spending, goals, progress, changes and be sure to celebrate wins. Check out this post I wrote for GoGirl Finance for more about Talking Finances with Your Partner.
7. Who’s insurance and benefits will we keep? Make sure to check on whether combining insurance coverage will save you money and get you a better rate. If switching health insurance, check if your same doctors are available under the new coverage and the changes to co-pays and covered services. With life insurance, as I’ve mentioned before, YOLO, so ensure you’re properly covered. Want more information on getting financially organized? Check out 9 Steps to Workable Wealth, a free guide delivered to your inbox with tips, tools and resources to get you on track in 2014! Ready to take advantage of a free 30-minute focus session to talk about your situation? Contact me today to schedule.