Your engagement is a time to plan your life together as well as your wedding. Once you decide to marry, it’s time to talk about money.
“Today many engaged couples are living together, so they’ve combined their households into one,” says Ellen Bigelow, Bigelow Family Financial. ”Some have already combined their funds, while others may have separate bank accounts. Regardless of the existing setup before you marry, it’s important to discuss and plan your finances, not only for your wedding, but for the next few years.”
According to a 2014 Trend study from The Wedding Report, couples contribute 58 percent of the money spent on wedding products and services, while parents pay 36 percent. The rest of the funds come from other loved ones.
Meet to plan
To begin the discussion with your loved one, talk about your financial situation and your goals. Do you have school loans or credit card debt? If so, share the amounts. What is your income this year?
Next, talk about your spending habits during the past three months. Where do you spend your funds? Perhaps one of you enjoys golf while the other enjoys bicycling. Then you’ll need to budget for your hobbies and interests. Ask yourself if your expenses are within your means.
Bigelow recommends this the 50-30-20 guideline for spending: “Fifty percent goes to have-to expenditures (shelter, food, transportation, et cetera). Twenty percent goes to savings and paying down debt. Thirty percent goes to what we want. For example, some couples think cell phones are a necessity. They are not.”
Talk about whether you will have a joint account or separate accounts. A third option is to have a joint account for most expenses but separate accounts for fun, also called no-questions-asked money. Also, what is your spending discussion threshold? For example, can you spend up to $100 and not discuss it with your spouse? If not $100, then how much?
Who handles the finances?
Generally one person has more of an aptitude for handling the family finances. Determine who will take on that responsibility, or decide whether you want to share the duties. If you plan to share them, be specific about who does what and when.
Review your financial plan monthly
“The plan is a document that is reviewed regularly to see if you are staying on track,” says Bigelow. Set up a monthly time to discuss your financial plan and then go on a date to celebrate your discussion. “It should be something to celebrate — you are taking responsibility for your financial future — not something to dread,” she says.
The best advice
“I recommend that people in their 20s, or early in their career, talk to an accountant or a financial planner,” says Bigelow. If you start saving money in your 20s, it has more years to grow. Begin saving before you have a mortgage and children. Then meet with your financial adviser annually to see how your financial management is working for you. Make adjustments as needed.
10 tips for planning your finances
10 tips courtesy of Ellen M. Bigelow, ChFC, CASL, Bigelow Family Financial, LLC.
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