Important Things to Consider Before the Wedding - Part I
Are you a spender or a saver? To whichever type you belong, chances are, you're marrying the other kind.
That is because these are basically the two types of persons when money matters are concerned.
So if you're making plans for a wedding, it's important to come to agreement on more than just the guest list, honeymoon location and color of the flowers.
You should go through a checklist of money matters--decisions about how you'll manage your income(s) and spending, along with important issues like saving, investing, insurance and planning for common goals.
Here are some things to consider: See the numbers that lenders see.
1.
Household spending - If you're a two-income couple, you'll have to make some decisions about how to handle the two paychecks.
Are you going to deposit both checks into one account, or each keep separate accounts and pay for specific bills? Would you consider creating one "household account" and each contributing to it? Let's say your salaries are different.
If you do decide upon a household account, will you each contribute the same amount, or an amount proportional to your income? While you're considering these questions, keep each other's sensibilities in mind--especially if you agree to deposit all your cash in one account.
One partner might not want to divulge how much money was spent on that new suit.
And combining finances makes it difficult to buy a birthday or holiday present for your spouse.
If one spouse decides to work part time, work at home raising children or even become an entrepreneur without a regular paycheck, you'll have to restructure your expectations about how much money you can spend and save.
Valuing financial contributions to a marriage means you'll have to look beyond dollars and cents.
Otherwise, the spouse with the larger paycheck may demand control over financial decision-making.
And that's a recipe for marital disaster.
Once you settle upon a plan, you'll find it easier to manage your finances if both of you use the same systems.
Start banking online, if you're not doing it already.
You'll find it not only a timesaver, but a practical way to organize your joint finances.
You can each keep separate checking accounts, and even open a new joint account.
For some more great tips check out the Earcancy blog 2.
Setting goals - It's easier to avoid disagreements if you sit down and make a list of personal and mutual goals-before the wedding, preferably, but soon afterward in any event.
Perhaps you're saving for a down payment on a house.
Open a separate account and decide in advance how much risk you'll take in investing as you continue to accumulate money there.
If one spouse is a day trader and the other a penny pincher, you're setting yourselves up for bitter arguments unless you agree on a strategy in advance.
While lack of knowledge may be one reason for a disagreement, it's important to respect your spouse's level of risk tolerance, which is developed in childhood and is as hard to change as any other basic value.
Problems arise when one person comes to the marriage with substantial savings or investments while the other brings a pile of past debts.
Can you sit down before the ceremony and openly discuss your current financial situation? Is the "saver" willing to subsidize the "spender" by contributing more to the household account, so that the spender's past debts can be paid off? And is the spender willing to commit to a plan for paying off all those credit-card balances and student loans? Remember that, in many states, each spouse's spending and debt patterns reflect on the credit report of the other.
And any time you commit to a joint obligation, such as a mortgage, your credit reports will be commingled.
If you can't discuss these issues openly before marriage, you're bound to fight about them afterward.
That is because these are basically the two types of persons when money matters are concerned.
So if you're making plans for a wedding, it's important to come to agreement on more than just the guest list, honeymoon location and color of the flowers.
You should go through a checklist of money matters--decisions about how you'll manage your income(s) and spending, along with important issues like saving, investing, insurance and planning for common goals.
Here are some things to consider: See the numbers that lenders see.
1.
Household spending - If you're a two-income couple, you'll have to make some decisions about how to handle the two paychecks.
Are you going to deposit both checks into one account, or each keep separate accounts and pay for specific bills? Would you consider creating one "household account" and each contributing to it? Let's say your salaries are different.
If you do decide upon a household account, will you each contribute the same amount, or an amount proportional to your income? While you're considering these questions, keep each other's sensibilities in mind--especially if you agree to deposit all your cash in one account.
One partner might not want to divulge how much money was spent on that new suit.
And combining finances makes it difficult to buy a birthday or holiday present for your spouse.
If one spouse decides to work part time, work at home raising children or even become an entrepreneur without a regular paycheck, you'll have to restructure your expectations about how much money you can spend and save.
Valuing financial contributions to a marriage means you'll have to look beyond dollars and cents.
Otherwise, the spouse with the larger paycheck may demand control over financial decision-making.
And that's a recipe for marital disaster.
Once you settle upon a plan, you'll find it easier to manage your finances if both of you use the same systems.
Start banking online, if you're not doing it already.
You'll find it not only a timesaver, but a practical way to organize your joint finances.
You can each keep separate checking accounts, and even open a new joint account.
For some more great tips check out the Earcancy blog 2.
Setting goals - It's easier to avoid disagreements if you sit down and make a list of personal and mutual goals-before the wedding, preferably, but soon afterward in any event.
Perhaps you're saving for a down payment on a house.
Open a separate account and decide in advance how much risk you'll take in investing as you continue to accumulate money there.
If one spouse is a day trader and the other a penny pincher, you're setting yourselves up for bitter arguments unless you agree on a strategy in advance.
While lack of knowledge may be one reason for a disagreement, it's important to respect your spouse's level of risk tolerance, which is developed in childhood and is as hard to change as any other basic value.
Problems arise when one person comes to the marriage with substantial savings or investments while the other brings a pile of past debts.
Can you sit down before the ceremony and openly discuss your current financial situation? Is the "saver" willing to subsidize the "spender" by contributing more to the household account, so that the spender's past debts can be paid off? And is the spender willing to commit to a plan for paying off all those credit-card balances and student loans? Remember that, in many states, each spouse's spending and debt patterns reflect on the credit report of the other.
And any time you commit to a joint obligation, such as a mortgage, your credit reports will be commingled.
If you can't discuss these issues openly before marriage, you're bound to fight about them afterward.
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