What’s that? Are those wedding bells ringing in the distance? There are – for you.
Yet you haven’t popped the question. Honestly, this is a good situation to be in. The reason being is that you have a lot to consider before getting engaged.
It might sound silly because the point of getting engaged is to profess your undying love for someone else. You see yourself spending your life with no one else but your partner.
But there’s a little more to that. While you and your partner are deeply in love, you need to also ask yourselves whether you’re ready for marriage? And we don’t mean in the “Am I really ready for marriage?” way; rather, you should ask whether you and your partner are financially prepared for marriage.
Haven’t had the money talk with your partner just yet? Now is the time to have it. Not only can you determine whether your futures align, but you can also make smart money moves to get your marriage started off on the right foot. Here are the essential financial topics you and your new fiance should talk about:
1. Have the money talk.
Time to lay everything out on the table. What’s your debt, income, credit score, assets, monthly budget, and more? The two of you will be sharing a home and family soon, and you need to make sure you’re on the right page. It will also help you determine what you’re both able to spend, both from the start and in the long term. For instance, how much do you want to spend on your wedding? What’s your budget for men’s wedding bands?
2. Discuss your (financial) future.
The two of you should equally discuss where you see your lives going. In particular, what will your future together look like, both as individuals and as a family? This includes:
- When you’d like to get a home
- Whether or not you want kids (and how many)
- Whether you’re happy in your careers
- If you ever want to start your own business
- What investment options you’d be comfortable with
- What you’re comfortable spending on
- Will your kids pay for college themselves or will you help?
- When do you both hope to retire?
This will help you both understand what your financial future will look like, along with whether or not your financial needs and interests truly align.
3. Manage your debt.
Listen, debt is a common part of life. Sometimes things aren’t as financially strong as you’d hope they were, and you need to cover your costs in a quick way. If you or your spouse have a significant amount of debt on your shoulders, you should immediately begin working on cutting it down. It might be stressful to do, but it’s an important way of starting your marriage off on the right foot.
4. Begin investing in your future.
Another important thing you and your partner can do is to begin investing in your future. This is important, as it will help ensure the two of you can avoid getting into debt, all while being able to feasibly support yourselves, both with your jobs and outside of them. Common ways to improve your financial portfolio include:
- Buying a home
- Buying real estate
- Investing in fractional real estate – real estate owned in percentages by separate people
- Investing in stocks and (potentially) in cryptocurrencies
These are simple ways to bolster and diversify your portfolio, protecting your financial security and assets.
5. Open a joint savings account, once engaged.
Another great way to make the most of your funds is to both contribute to a high annual percentage yield (APY) savings account – a bank account that accrues a lot of interest every year. By the two of you contributing to the same account, you’ll be putting more money in, which means you’ll be producing higher yields.
It’s also a great way for the two of you to evaluate your financial standing. Seeing your savings balance can help you determine whether you can handle another kid when you can consider a renovation for your home and more.
6. Create financial rules.
Mistakes will happen. The two of you will eventually have disagreements on how money should be spent, whether it’s a new car or sending your child to a private high school. But that’s okay. It just requires regular cooperation. The best way to do this is to have regular conversations and to set a game plan the two of you can follow, starting with your current spending and all the way to retirement planning.
For instance, you might not want to spend an arm and a leg on your wedding. If you both agree on this, the two of you can have a backyard wedding to up the intimacy and save money for building your new family.
7. Start saving.
Last, you and your spouse need to start setting money aside, if you haven’t already. And not just into your savings and checking account. You and your spouse need to start saving up for retirement – so you can enjoy your later lives once you’re both done with work, the kids are out of the house, and you have grandchildren of your own.
The two of you should create 401k accounts you can contribute to through your employer. Your employer will match up to a certain percent, which makes it even more important to contribute, as you’ll be setting aside more money than you’re technically making.
A general rule calls for setting aside 10% of your pre-tax paycheck into a 401k account. If you want to set aside more for retirement, you can assign another 3% to 5% to a Roth IRA, which is taken out of your paycheck post-taxes – the benefit being that your Roth retirement funds won’t be taxed when they are paid out in retirement, including all the growth that happened in your funds. Don’t forget to move your savings out of the initial Roth settlement fund into high-growth stocks and index funds, or your money will sit perpetually in stasis.
There’s no right way to create a secure financial future for you and your spouse. Things happen, jobs come and go, and your situation may change now and then. But that’s okay. As long as you and your partner have a game plan, you can make it through the highs and lows. After all, you’re in this together, for better, for worse.