How to Be A Financially Smart Newly Engaged Couple

When a couple becomes engaged, it can be an amazing and beautiful life changing event. Not only will two separate families become one, but two separate financial histories will also meet, often clashing and causing distress for a newlywed couple. It is vital that couples talk about the F word (finance) before marriage, or even before becoming engaged. It can save a marriage.

Difficulty: Moderately Easy

Instructions

1. Talking about finances can be a touchy subject. If you and your partner are reading this article together, that's great! You're already on the right track. Choose a date and time a few days from now to casually talk about your future and money. Don't think of it as a big deal. Skip to Step 3.

2. If you're reading this alone and plan to ask your partner about it, I wouldn't recommend bringing up the subject out of nowhere. Instead, kindly ask your partner when would be a good time to meet and talk about your future and money. Don't make it a big deal, and just ask without force. Choose a time and place you are both comfortable with.

3. In preparation for your "financial date" with your partner, make note of your own financial situation. Are you in debt? By how much? What is your credit score? Do you even know?

4. Also, think about your ideal plans for the future. What do you want in life? How do you imagine your daily lives together when you're older, and the kinds of things you both own? Also, think about retirement. Yes, retirement. How and where do you see yourself living when you retire. Are you retired living in a foreign country, or are you living in your dream cabin next to a lake in Tahoe? These are all really important things to consider now, no matter how young you and your partner may be.

5. Before you meet together, think the following: "We love each other and want the best for our relationship", "We are now both a family unit that must work together to be happy and prosperous", "It's not all about me, it's about US."

6. Starting to talk about finances can be the toughest part. I don't really believe in the "write it down on a piece of paper and exchange notes" type of conversation. You're both a couple and should know how to express anything to each other, even if it's about finances - ESPECIALLY if it's about finances. One of you start by talking about the future. I'll throw out the first question. Where do you both see yourselves in 5 years? Where are you living, how big of a house, and what is your family like (kids, schedule, etc.)?

7. Next, talk about what both of you want to accomplish in life. What are the things you really really want to do? It can be anything. These are things that usually involve money, so it's important to understand what the other person wants to accomplish in life. It is both of your duties to do everything you can to negotiate with each other to someday reach those goals. When one of you is answering, don't ever EVER shake your head or look surprised. These are personal feelings that can easily be hurt, so be supportive no matter what.

8. If there is ever a conflict of interest, that is absolutely not a bad thing. It's actually good because you're talking about it now and can negotiate before it could erupt into something unsolvable in the future. Remember that you're both working together, so you both may need to sacrifice things to meet the needs of both parties for the good of the family unit.

9. Next, let's talk about debt. Are you paying off any loans from school? Are you paying for a car or a mortgage? How about credit cards, are you deep in the hole? You both should honestly and truthfully tell each other your situation. You can both work together to create a plan to alleviate any outstanding debt, especially bad debt like on credit cards or paycheck advances. Having bad debt will decrease the amount of money you can save together, and increase the time between now and when you reach your goals.

10. Do you know each other's credit scores? You should. If not, you can go to places like www.freecreditreport.com or other free FICO score reporting websites to see what shape you both are in. It's important to find this information out now, because it would be really bad to find out in the future that the house you both wanted denied your application because of a bad credit rating that you didn't know existed. Again, be honest so you can devise a correct plan.

11. Next, how you will handle each of your separate accounts. Do you want to have one combined account or two separate ones? Checking? Savings? Which branch? There is no right or wrong answer. It's different with each couple, so come up with a plan that best suits the both of you. Negotiate.

12. Lastly, talk about spending habits. Determine roughly how much you both should save each month based on your goals for the future and when you want them to happen? Your spending habits should be determined by how much you are saving. Savings for the future first, then the bills, then the play money. If you haven't heard this before: "Always pay yourself (as a couple) first", so that means save! Negotiate on what you can and cannot cutback on with spending, and soon you'll both be on the same wavelength about your financial future.

Tips & Warnings

• I've heard that talking about finances together while on a walk can comfortably alleviate some of the stress that can come from the conversation.
• Always be honest about your own financial situation. Never lie about what you want and what the numbers look like for you.
• If this seems like a lot of information to talk about in one day, feel free to break it up into 2 or 3 different sessions. It may be good to have a routine to talk about finances together.
• Remember, it's about negotiation for the family unit and goals.
• Sometimes, it can seem impossible to talk about fiances with your partner. He or she may avoid the conversation at all costs, at which point you need to keep trying, because it is one of the most important things that a couple can talk about. Again, it can be the difference between marriage and divorce.

Resources

• Smart Couples Finish Rich - The Best Couple's Book About Finances

[jessupsamuel]

on 2/21/2009 Great advice!

[Buckeye207]

on 11/6/2008 Wonderful advice and very well written. Having these conversations at the start of a marriage is such a great way to start building the foundation your marriage will grow on. 5*

[00Analana]

on 11/6/2008 This is a fantastic article! Every new couple (and even some old couples) should read this!

[Gracie1402]

on 11/6/2008 great article. I wish my husband and I were a little smarter with money when we were first together but live and learn...:)