So you're engaged. Congrats! We're sure you have a ton on your plate, even if the plan is to keep the wedding small and intimate. To help you get your financial house in order, here are seven money moves to make before you get married.
1. Have the big money talk
Assuming you haven't already, that is. Sure, money is a touchy subject, but you'll have a hard time reaching future financial goals if you don't get on the same page — or lay all your cards on the table — before saying "I do."
Discuss whether you want to pool your finances or keep them separate. Decide how you'll share expenses. Disclose any debt or financial obligations each of you bring into the marriage and how you would prefer to handle them. Speaking of debt ...
2. Come up with a debt repayment plan
If you and/or your partner have outstanding balances, focus on paying them off, especially if they're tied to a high interest rate. Fortunately, there are ways to expedite paying off credit card debt. If the red ink runs deeper, consider talking to a financial adviser or credit counselor.
3. Check your credit together
Not the most exciting date night, we know, but given credit scores determine everything from mortgage rates to credit card annual percentage rates and insurance premiums, it's important to know just how creditworthy you and your partner are.
Those digits will play a role in many major financial decisions. For instance, say you have good credit, but your partner doesn't. When it comes time to buy a house, you could secure a lower interest rate by applying for the mortgage on your own. (Lenders look at the average of scores when there are co-applicants.)
Of course, there are other factors to consider: If the mortgage is solely in your name, you're the one responsible for repaying it, barring any other formal contract. Plus, if your income isn't high, you will need your partner's salary to meet the debt-to-income requirements associated with a qualified mortgage.
But, as an over-arching point, you'll want to properly assess all your options — and preclude any nasty financial surprises if you decide to open joint accounts in the future.
4. Apply for life insurance
Marriage is essentially a commitment to "do life" together. As a couple, you'll depend on each other emotionally and financially. Life insurance allows you to provide a financial safety net for your soon-to-be spouse (and vice versa) should the unthinkable happen — and there's good reason not to sit on applying for a policy. Life insurance rates rise alongside your age and the development of any health conditions. (Policygenius can save you time and hassle by helping you easily compare and buy life insurance together).
5. Craft a household budget
Once you have a sense of your debts and fixed expenses, take a pass at your household budget. Financial apps can help you set limits and track monthly spending, but so can this simple budgeting spreadsheet if technology is just a little too much.
6. Start a family emergency fund
The decision to separate or combine your finances is personal. What works for one couple doesn't necessarily work for the next. But a joint emergency savings account is a great way to approach surprise shared expenses, like car or home repairs.
Consider a high-yield savings account outside of your and/or your partner's primary bank, so it's harder to tap for non-emergencies. Agree to pay yourselves (i.e. your joint account) first as part of your monthly budget.
7. Prioritize future financial goals
Once you've established a strong foundation, you can turn an eye toward the future. If you want to buy a house, focus on improving your credit and saving up for a down payment. If you're worried about your happy golden years, take time to set up a comprehensive retirement plan. See a kid (or two) in your future? Check out our pre-pregnancy financial planning guide to prepare for those bundles of joy.
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