It’s the most romantic day of the year, but don’t lose your head! Guest blogger Allison Engel, director of women’s market strategy at Northwestern Mutual, is here with a checklist of the money must-asks before getting engaged.
The two of you are a match made in heaven, but are your finances?
While money talk might not be first-date material, it’s essential when it’s time to settle down. Don’t wait until after you’ve put a ring on it to discuss finances with your significant other. After all, your individual financial situations will ultimately affect your future together.
Here are five questions to get the conversation started.
1. What’s our financial plan, post-wedding? After getting engaged, your first priority is likely how to pay for the big day, which can be a great financial ice-breaker for a bigger conversation about your future. Understand your partner’s short- and long-term financial goals. Then discuss how the two of you will work together to save, spend and invest to make those dreams a reality. Need help? Meet with a financial representative to get started.
2. Am I also saying ‘I do’ to your debt? Get a clear picture of your partner’s debt to know if the two of you might be in for some tight times after exchanging vows. Discuss not only the amount but also the kind of debt — student loans, credit cards, car payments, etc. — and what the plan is to repay them.
3. Are you serious about saving? Understand each other’s money management styles. Is your partner sometimes too frugal? Can you recall your credit card numbers from memory because it’s always at the ready? While neither is necessarily a bad thing, both of you must agree on what your household budget looks like after you’re hitched.
One rule of thumb is the 20/60/20 rule — 20 percent of your income should go to saving and investing; 60 percent for essential expenses; and 20 percent for discretionary purchases like entertainment and shopping.
4. What’s mine is yours, right? When thinking about your household budget, you also need to decide if you and your partner will combine finances. You might think a joint account is a no-brainer but your sweetie might feel differently.
One option: Set up a joint bank account for necessities like rent, mortgage payments and utilities, and keep your separate accounts for discretionary items — winery tours with friends, shopping sprees with your mom or that regular mani/pedi at your favorite salon.
5. Who wears the (money) pants? While it’s important to plan for your financial future together, how will the two of you handle day-to-day finances? You need to know who’s responsible for making sure the bills get paid, whether it’s one or both of you. If one of you decides to take on the money management, have regular check-ins about expenses so you’re both in the know.
Whatever your feelings about the money talk, it’s an important one to have, especially with the person with whom you plan to share your future. Using this information as a guide, you can confidently have the talk before your big walk down the aisle.