An engagement is such a happy time for couples. You’re about to start an exciting new chapter in your life and get to go into major party planning mode. Sounds fun to us.
When you’re engaged, there are a lot of important conversations to be had. Where do you want to get married? What will you register for? Will you honeymoon somewhere tropical or in a big city? All of these questions are pretty fun to answer. Which is why it’s fairly understandable if you’re more focused on a debate between a cash bar or an open bar instead of how you want to manage your finances.
During all the excitement of being engaged and planning a wedding, it can be easy to forget to have some of the less fun conversations. We get it, retirement planning doesn’t hold a candle to cake tastings. But before you walk down the aisle or hop online for a Zoom wedding, it’s important to have some super honest money conversations. While every couple has different financial needs and priorities, these conversation starters should get the ball rolling.
Will we keep our finances separate or join them?
While it’s extremely common for couples to fully combine their finances, doing so isn’t a must. A 2018 survey found that 28% of millennial couples choose to keep their finances separate. There is no one right way to manage your finances as a married couple. Combining your finances after you say I do may be a no brainer for you, but other couples may find it easier to keep managing their finances separately. The key to success here is being on the same page. Start talking about how you’ll manage your finances after marriage during your engagement so you have plenty of time to think about what will or won’t work for you.
Who will manage our finances?
Ideally, both of you will be fairly involved in managing your finances, but it’s understandable if one person takes the lead. Managing household finances can be a lot of work and one partner may be naturally drawn to that responsibility. Discuss how you want to divide up your financial housekeeping and how you’ll ensure both of you are on the same page, even if one person takes the lead. The Consumer Financial Protection Bureau recommends that married couples are both able to handle managing their finances if for some reason the usual caretaker can’t manage them anymore. They suggest scheduling regular dates to sit down and review your finances together, maintaining a list of account information in a secure way that both spouses can access, and having a plan about who will manage your money in an emergency situation (this may involve another family member if both spouses are indisposed).
How much do we want to spend on the wedding?
Are you ready for some enlightening statistics? A 2019 study found that 45% of American couples married in the last year between the ages of 18 and 53 went into debt in order to pay for their wedding. Sadly, wedding debt led to some big marital problems for these couples. 76% of the newlyweds that went into debt reported arguing about wedding-related expenses with their spouse and 47% of those in debt reported that money caused them to consider divorce. We’re not sharing those numbers to scare you, but to highlight the importance of having an upfront and honest conversation about how much money you want to spend on your wedding and how much money you can actually afford to spend on your wedding.
How will our parents play a role in our financial life?
It isn’t uncommon for parents to chip in to help pay for a child’s wedding. This is often a kind and generous act and is also the first time as a couple that you may experience your parents playing a role in your newly joint financial life. Some couples may welcome the help and others may feel uncomfortable about it. Either way, you should speak with your betrothed privately about what type of financial involvement you’re comfortable with your parents having in your lives. Would you be okay with accepting their help with a downpayment? Do you want them knowing how much money you make? Are you fine with borrowing money, but not accepting large gifts? Talk it out and get on the same page so you can act as a united front if boundary issues begin to arise.
What is our stance on lending money to family and friends?
On the flip side, would you ever be comfortable lending money to a loved one? Even if you manage your finances separately, you’ll want to run major financial decisions like this by your partner. If you establish early on that this is something one or both of you don’t feel comfortable with, you’ll know how to proceed if approached about lending money in the future.
What will we do about our debt?
If one or both of you have debt, it can be helpful to make a plan together to tackle that debt. This doesn’t mean that you have to join in paying down the debt as soon as you’re married (although you may want to), but you should both be aware of what your debt repayment plan is. Will you tackle it together? Will it be the responsibility of the one who accrued the debt to pay it down? Will you want to simply pay off your spouse’s debt immediately with money you brought to the marriage? Debt can cause a lot of stress, so you don’t want it hanging over your heads without having a plan in place to eliminate it. Almost half of couples that participated in a 2018 study, and who were dealing with debt, named money as their biggest relationship challenge to overcome, so this is an important conversation to have.
What are our financial goals?
It’s time to look to the future! Having a partner who can help you work towards your financial goals is so exciting. Start to discuss what you want out of life and how money can help you get there. Do you want to buy a home in the next five years? Are you hoping to retire early? Do one of you not want to work while raising children? Setting financial goals that you can work towards together can make your relationship stronger. Try to have fun setting goals and challenges together. You have a bright future together, so enjoy making the most out of it!
If paying down your credit card debt faster and saving money — on your own or as a couple — is one of your goals, learn more about how Tally can help!