Love! It can be an overpowering emotion, blocking out everything else except your feelings for that wonderful person that you can't get out of your head. Soon, marriage is on your mind and wedding bells are ringing. It's a picture-perfect, fairy tale romance, with one little exception: After the honeymoon is over, the bills will need to get paid.
Because the ongoing need to pay those bills can put a damper on a relationship, smart couples talk about money before they talk about forever. Even if love has trumped cash and the ring is already on your hand, talking about money before it becomes a problem will go a long way toward enhancing your odds of a marriage that's full of "happily ever after".
Do you see eye-to-eye when it comes to money?
You and your spouse share everything! Hopes, dreams, passions and more … but do your personalities match when it comes to money? Does he like to spend? Does she like to save? (To read out more about this, see Test Your Money Personality and Relationship Money Matters.)
He may have loved your wardrobe when you were dating, but did he know that you bought it with a credit card and will be paying interest on it for the next 10 years? You may have loved driving around in an exotic sports car when you were dating, but did you realize that the monthly payment and yearly insurance bill on that thing take a huge bite out of both your paychecks? You may have fond memories of those nights on the town, but building a future together requires more than just dining and dancing. In other words, marriage is a lot different from dating in that you'll be legally combining your financial affairs; therefore, once you are married, your spouse's choices will have a greater impact on your ability to meet your future financial goals.
What's your status?
To map out your financial future together, you need to take a look at where each of you stands today. Your combined incomes will need to cover the cost of all of your living expenses, including outstanding debts. Car loans, school loans and credit cards all need to be taken into consideration. Creating a budget can help with this effort. (Learn how to manage credit in Credit, Debit And Charge: Sizing Up The Cards In Your Wallet and The Importance of Your Credit Rating.)
Although many people cringe at the idea of budgeting, it's not just about restricting your spending, it's about figuring out how much you can spend after you pay the bills. (To find out how to get started, see Get Your Budget In Fighting Shape and The Beauty Of Budgeting.)
If either of you have ever filed for bankruptcy, the aftermath could have a big impact on your future. The topic probably never came up during those candlelight dinners, but it's likely to arise when you apply for a loan together. It's best to share this information before it becomes a stumbling block. (Find out more about bankruptcy in What You Need To Know About Bankruptcy.)
Debts and Assets
Debts aren't the only the only aspect of your financial life that you need to consider. Assets may play an important role too. If either of you has a substantial amount of money stashed in a savings account or tucked away in investments, discussing your plans for that nest egg is definitely a good idea.
If one of you happens to be a partner in a business or heir to a family fortune, a prenuptial agreement may be something to consider. It may not be romantic, but it may save your marriage or at least minimize future problems. (The article Marriage, Divorce And The Dotted Line provides some insight into the potential value of a prenuptial agreement.)
Time to Talk
If rose-colored glasses have kept you from getting around to talking about money, it's time to take them off, or at least tilt them down for a moment. Ideally, you'll want to set aside some time to discuss your financial goals before you send out invitations to the wedding.
After you've figured out the current state of your finances, you should talk about the future. What are your goals? Do you want to have children? (Read Kids Or Cash: The Modern Marriage Dilemma and Consider The Outcomes When Cutting An Income for an overview of the financial challenges that come with having kids.) Do you have money tucked away in an emergency fund in case a cash crunch arises? Do either of you have a savings plan in place to fund your retirement?
Contracts and Love
Romantic dreams aside, living on love only works in pop songs and in the movies. In the real world, marriage is both a serious matter and a legal contract. Entering into marriage with a solid understanding of the financial aspects of the agreement (and make no mistake about it, it is an agreement, and it can be an extremely complicated and expensive agreement to break) can lead to a long and rocky road instead of a lifetime of a happiness.
To increase your odds of a happy future together, spend an afternoon talking about the past, the present and the future while making some plans. If you can come to an understanding about the current state of your finances and reach an agreement on where you are going and how you will get there, chances are that you'll be successful in both love and life as you work toward your goals together.
To find out how to afford your wedding, read Revealing The Hidden Costs Of Weddings.