In order to have a successful and prosperous marriage with the one you love, your marital finances must be in order and you must both be on the same page regarding money and how your household will approach it. Read the 8 things to do before getting married below for a comprehensive guide on getting financially prepared before your wedding.
1. Have a Conversation (or many) About Your Views on Money
If you’re engaged and planning on getting married, we hope you’ve already had all of the important conversations that a couple needs to have before tying the knot. Such conversations include discussions about:
One important topic that should be included in the above set of important premarital discussion topics is (but is surprisingly often not included) is a conversation about money and finances. We’re not sure why this is and we only have anecdotal evidence for this statement, but it seems that couples have an easier time discussing things such as how many babies they want, their religion, or where they want to live than they do discussing money, finances, personal spending and saving habits, and financial goals.
In order to maximize your chances of having a happy and prosperous marriage that creates wealth and prosperity for your household instead of poverty and stress, it is wise to have multiple discussions about money and how you relate to it before your wedding. These discussions don’t have to be formal in any way nor do they have to be very technical or sophisticated, but they must be honest and they must be courageous - you must not be afraid to tell your love and future spouse how you feel about all things related to money or finance.
Here are a few points you should cover in the conversation(s):
These discussions should be loving - you’re not fighting or trying to change your future husband or wife very quickly. You’re not going to not get married to someone you love just because they are an over-spender and because they are terrible at handling finances - although you will want to help them change so that you can have a happy and prosperous marriage. Remember you’re speaking to the one you love and the one you must care for - allow that to color your conversations.
Although you want to be loving and compassionate, you also don’t want to be too weak and overly understanding - your love for the other person requires that you help them become a better person in every way and that includes a better person financially. Additionally, money is important to a marriage (many marriages fall apart due to financial issues) so you’ll want to guide your relationship and your future household to a better financial place in a courageous way - you must muster the courage and the energy to improve things if your future husband or wife isn’t financially savvy or financially intelligent (or if they are financially irresponsible). A marriage isn’t just an economic partnership (it isn’t any longer at least - and it shouldn’t be if we are to realize our true potential as loving human beings) where each has an equal say in how things go. A marriage is (or, at least, should be) a sacred bond between two people in our modern Western culture that gives each partner a certain right to influence things and influence each other beyond what would be allowed in an equal partnership. It’s not that each of you owns 50% of your marriage - each of you owns 100% of the marriage and that ownership gives you a sacred right and a sacred duty to improve the relationship and improve the other person where they are weak or lacking.
2. Reveal All Debt to Each Other
This is simple but can be difficult to do if you have a lot of debt that you have not previously revealed to your partner (usually because you were afraid of being judged for it).
Hopefully, you’ve already revealed all of your debt to each other earlier in your relationship, but if you haven’t the first step is to find out all of your debt yourself. It’s surprising to see how many people don’t know their full debt balance themselves. If you’re not totally sure about how much money you owe, look into the following:
Once you’ve assembled a list of all your debts (this is an exercise that will prove very useful beyond just this step), communicate it to your partner. Your partner should do the exact same thing.
If you are hesitant to do this because of some sort of fear - stop being scared and even if you are scared, do it anyway. You’re going to marry this person and have a life with them - it is not acceptable for you to be willing to do all of the things that come with marriage and to commit your life and energy to this union but be unwilling or to too afraid to reveal all of your debt.
Revealing all of your debt to each other before marriage is a wonderful exercise. It might cause some drama or tension at first if things weren’t previously revealed, but once things are in the open, your relationship will improve because you will no longer be hiding things in your financial closet. Additionally, you will have set yourself up for a prosperous and happy marriage because by being aware of your household’s debt load, you will be in a much better position to deal with it and to gradually eliminate it on your way to building wealth and achieving financial freedom. A household that is confused about how much money it owes cannot be a financially successful and prosperous household.
3. Reveal All Assets to Each Other
This one should be easier than Step 2 if you have a lot of debt, but you still might find some resistance if you have a lot of assets. That’s somewhat understandable, but you must ask yourself what marriage really means to you and what you want from this marriage if you are unwilling to tell your future spouse what your current asset holdings are. Assets include everything you own (eg. cash, stocks, bonds, real estate, gold, silver, private business interests, etc.).
Marriage means combining everything - including your assets (unless you have a prenuptial agreement - more on that in Step 8). That means that when you get married, from a philosophical perspective, everything that belongs to you belongs to your spouse. Legally that may not always be the case, but we’re not talking about marriage law here - we’re talking about what marriage means beyond the letter of the law and what will set you up for a successful, prosperous, and happy marriage. If your partner is going to inherit everything you own when you’re married, shouldn’t they be aware of what you own today? Isn’t it much wiser to prepare each other for what is to come than live in some dark illusion?
Again, some people might hesitate, feeling that they should keep their assets separate or feeling afraid to reveal how much or how little money they really have. That is possibly understandable, but it cannot become an excuse to avoid this very important and very necessary part of marriage - combining everything with your husband or wife. If you cannot allow your future spouse the knowledge of what you have, how can you possibly enter into the sacred bond of marriage with them?
Of course, if your spouse has proven to be very irresponsible with money and reckless with finances, you might be unwise to go beyond just revealing what you own. In that case, you’ll still want to reveal your assets, but you will want to make sure that you are in total control of them now and possibly even after marriage. This will prevent your newly formed household from misbehaving with money - if your spouse misbehaves with money your household misbehaves with money. This can become a touchy issue if your future spouse is very irresponsible with money because he or she isn’t likely going to easily accept you simply revealing assets but not allowing them to control them in any way. If your spouse is prudent, mature, and honest with himself or herself, however, they will likely understand that they have proven themselves to be an unworthy recipient of control over of a lot of money or a lot of assets - they’ll understand that you are somewhat justified in your caution and that they’ll have to slowly prove to you that they have changed their ways and are committed to being in a healthy and prosperous union with you. If they don’t understand, however, you’ve got a bit of an issue on your hands that is now out of the realm of personal finance and household finance and in the realm of relationship problems - you might consider seeking some sort of relationship counseling or premarital counseling before tying the knot in such an unpleasant situation.
4. Check Each Other’s Credit (FICO) Scores
This is a simple one and should be easier than both Step 2 and Step 3 because it’s not as important for your financial future - although your FICO score (aka credit score) is somewhat important, it isn’t nearly as important as cold hard assets and the debt that you owe in determining your household’s financial well-being and financial future.
Here are are few reasons why a good credit score is important:
The good news is that once you’re married you’ll be able to rely on your spouse’s credit score if theirs is good and yours is bad (assuming you are both applying for the financing). If both of you have poor credit, however, then you’re in a tough situation because you might find it difficult to finance purchases (and do some other things that might require a good credit score) in the first few years after marriage until you two are able to rebuild your credit.
Remember, there’s a fine line between being too concerned and not concerned enough about your FICO score and credit history - be concerned but don’t obsess over it or think that your credit score is the most important thing in your financial picture. Your abilities to earn a solid income, to live below your means, to save money, are far more important than your credit score because they actually determine how much money you have in your pocket and in the bank - a credit score is only a number that is supposed to predict your creditworthiness (how likely you are to repay a loan) but you can’t live on your credit score - your credit score doesn’t pay your rent or put food on the table or pay for your vacation.
You can check your credit score in a variety of places. One free service is Credit Karma, although there might be other (possibly better) options out there.
5. Save to Pay for Your Honeymoon in Cash
After your wedding, if you plan on doing a honeymoon (there’s nothing wrong with not doing a honeymoon or postponing it), make sure you pay for it with cash - do not go into debt to pay for a vacation (yes, a honeymoon is a vacation) no matter how important you think it is.
You will be making a big mistake if you finance your honeymoon with credit cards and other forms of debt. You’ll return from the trip but you’ll be stuck with the debt for many months or possibly years. The debt will prevent you from achieving other financial goals and the debt will be attached to a vacation you already took - you won’t able to go back and “sell” the vacation as you would be able to sell your house if you decide it was an unwise purchase. If you pay for your honeymoon with cash, however, you’ll come back home calm and you’ll be able to continue your financial program (or start one) as a married couple and you won’t have to first pay down thousands of dollars of useless credit card debt - debt that was incurred for a luxury purchase.
If you do have the cash to pay for the honeymoon, however, don’t hesitate to use the money you’ve saved up on a nice (but reasonable) honeymoon with your future husband or wife. Some financial nerds and super-savers might think it’s better to instead invest the money rather than spend it on a honeymoon after a wedding. While this might be a good move when considering only your financial life, your spouse (who might not be a super-saver or might really want a honeymoon) might find the entire notion of foregoing a honeymoon to instead save or invest the money very unromantic and they could be disappointed with such an idea. Remember, life isn’t just about your net worth. So, if you’ve got the money for it and it’s something you two want to do, do not hesitate to take a honeymoon with your new spouse and don’t feel even a little bit guilty about doing it - enjoy your honeymoon and remember that the only reason we want a lot of money and a lot of wealth is because we want to help people and have amazing experiences in life. Money for money’s sake is really a pointless and dark proposition that won’t make neither individuals nor societies truly rich in the broad and proper sense of the word.
Additionally, do not tap into your emergency fund to pay for your honeymoon. Tapping into your rainy day fund to pay for such a luxury is almost as bad as going into debt to pay for it - you know very well that a honeymoon is not considered an emergency.
6. Save for Moving Expenses and New Furniture
Most couples do some sort of living space change after marriage - either you’ll move in together or you’ll move somewhere new if you’re already living together. You’ll want to save up for any possible moving or moving-related expenses and pay for them with cash. Whether you’re just planning to buy a new couch for the living room in the apartment you currently live in or you plan to buy a new house in another country, if you anticipate some expenses for settling in together as a married couple, save for it immediately and aggressively to make sure you can pay for it all with cash. Do not make the mistake of burdening your new marriage and your new combined financial house with useless debt.
7. Consult with Family About Potential Help You’ll Receive from Them
Some new marriages are lucky enough to be blessed with financial support and financial assistance from parents, grandparents, or other family members. If you’re lucky enough to have parents or in-laws who will help you start your married life by contributing financially, be thankful for this and resolve to use your luck and their assistance as wisely and as prudently as you can.
It’s a good idea to speak to your parents (or other family members) well before getting married to understand how much they will:
Generally, each person should speak to his or her parents alone without the presence of the other future spouse - this makes things much more proper and pleasant for everyone and is in line with common courtesy. You know your parents and you should have an idea of their financial means and what they think they’ll contribute already so you shouldn’t be too surprised after the conversation(s). The point is to understand what’s going to happen so you can effectively plan for the future together.
8. Discuss Prenuptial Agreements and Make a Decision
Some people come into a marriage with substantial assets or with substantial incomes and wish to protect their assets or future incomes in the case of divorce. We won’t go into whether prenuptial agreements are “right” or “wrong” here, but you’ll want to discuss a prenuptial agreement with your spouse in a very tactful, respectful, and loving way if you want a prenuptial agreement set up before entering marriage.
Some people view prenuptial agreements as unromantic no matter what assets each partner brings into a marriage and no matter what incomes each person earns. Make sure to understand this if your partner is opposed to it. If you’re opposed to it and your partner wants a prenuptial agreement, understand where they are coming from as well. Prenuptial agreements are popular and most couples generally are able to relatively easily agree about having or not having one, but sometimes the issues can get touchy when a couple has never discussed this and when one partner has a disproportionate net worth and income relative to the other. Usually, prenuptial agreements are more popular among older couples, as younger couples often have not had the time to build enough wealth or develop high enough incomes to make a prenuptial agreement very useful.
Remember, your financial life is only a part of your life. The above 8 things are what you should do to maximize the chances of financial success in your marriage, but marriage is far more than a simple economic partnership - never forget this as you embark on what should hopefully be the most rewarding partnership with another human being of your life. Marriage is a complicated thing that is at once a legal, spiritual, and historic proposition with many traditions and historical aspects mixed in even in our modern Western society.
Pennies and Pounds wishes you and your future spouse the best of luck as you embark on this journey and we are thankful that we had an opportunity to contribute to your marital happiness and prosperity in some small way.
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