Tuesday 17 December 2013

Financial Smarts: Six Crucial Steps to Take Before Tying the Knot

You've met the love of your life and are planning on marriage, but it's important that you both are open to talking about finances. Money can be a touchy subject with even long-married couples, but discussing your finances and how you will be handling them is an important step to take before saying, "I do". Consider these six crucial steps with your future spouse:

Clear The Air

Now's the time to discuss your debts - how much you owe and why. Whether you owe $25,000 in student loans or $2,000 in credit card debt, you owe it to your partner and impending marriage to let them know what your financial obligations are, because once you're married, your financial obligations will be shared by both of you.
This conversation is also the perfect opening for discussing your credit history and credit score. Again, your financial endeavors will affect both of you, and the decisions you make together -- such as purchasing a car or a house -- so it's important that you are both aware of finances and credit scores.

Plan For The Past -- And The Future

Discuss how any current or potential family situations, such as an ailing parent, might affect your lives. Elderly or ailing parents might not the financial ability to provide for themselves in the long-term, which will put you and your spouse in the position of having to help them. Also, talk about having children, and that financial impact. From health insurance to elementary school field trips to college tuition, children never stop costing money, so now's a good time to talk about potential plans for them.

Combine Finances

Go over living expenses and all utility bills, and decide who will pay them and how. Make and trim your budget however you mutually agree to, but if you run into a disagreement over how to handle a particular financial obligation, such as the premium cable television subscription you don't think is necessary or the gym membership your significant other argues that you don't even really use, consider taking a financial counseling class, where you'll both learn better money management and general saving skills.

Set Up A Joint Bank Account

Even if you combine living expenses and have both of your names on all bills, you may still decide to keep separate bank accounts for paychecks and other deposits and transactions. This is fine, but you should ideally set up a joint back account that you will both make regular contributions to. This is an excellent way to establish a dedicated fund for home expenses, a down payment for a vehicle, or simply a dedicated savings account.

Avoid Debt

This sounds like an obvious rule, but your engagement and period of wedding planning can be very tempting times in terms of your tendency to want to indulge - and over-indulge. Set spending limits and adhere to a budget for your wedding say the professionals from Kelsos. The Law Firm recommends making sure that both of you are on the same page with these limits.

Get A Prenup

If one or both of you have substantial assets, or a business or piece of property that is valuable and worth protecting, consider a prenuptial agreement. Prenups aren't just for celebrities - they're for any couple who is realistic enough to understand that even the best relationships and marriages can break down. Prenups protect you both, and can often give you a better perspective on your finances.

Do you have have any questions or suggestions? Write in comment section.

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