You've set the wedding date and planned the honeymoon, and now you're dreaming of kids, relaxing vacations and a happy retirement together. But have you talked about how money management will play into those events?
Money -- or more specifically, the lack of communication about financial issues -- tops the list of reasons that marriages fail. Every marriage will face issues regarding budgets, spending, debts and investments. How those matters are approached can often be what makes or breaks a relationship.
Here are some money management tips to get off to a healthy financial start before saying "I do."
1. Check credit reports. It may be less romantic than a candlelit dinner, but finding out how each other is doing credit-wise can have a big impact. Read through a copy of each other's credit report. There maybe something in it that's a surprise.
A look at one another's credit report will reveal any outstanding debts or financial obligations, including student loans, credit card debt or even child support payments. Consumers can visit AnnualCreditReport.com and receive their report from each of the three credit bureaus once a year.
2. Correct and plan. Once you've looked over the credit reports, make a chart together to identify what is owed. If there are errors on the report such as a medical bill your insurance company covered but was marked as a late payment, ask for corrections. Then, if needed, talk about strategies to boost low credit scores.
Be open about what financial skills you want to utilize in your marriage, such as setting aside money each month for an annual vacation. This should include habits you want to avoid, such as maxing out credit cards.
3. Forecast your financial future. Once you're aware of each other's financial background, it's time to think about the future. Talk about what financial matters are important to each of you.
Do you want to buy a new house, save for your children's college days, or spend time with family members? Discuss your goals. Then sit down with an adviser who can help you fuse them to create a plan both of you can follow.
4. Don't forget about taxes. Before getting married, especially if this is a second or third marriage, consider asking each other for copies of tax returns.
By looking at tax return records, you may see that your significant other is squared away with the Internal Revenue Service. You might, however, be in for a surprise. In some instances, you may find your future spouse hasn't filed tax returns, or owes a sizable balance from previous years.
If one person owes a significant amount, look into setting up a system to make payments to the IRS. In cases with a large amount due, think carefully before tying your finances together.
5. Decide on a banking setup that works for you. If one of you is more detail-oriented, you may decide to have that person manage the daily finances. For couples who want to maintain their independence, keeping separate accounts may be an easier plan.
For couples just starting out, opening a joint bank account may make sense. However, if both of you have an established set of bank accounts and investments, you may opt for a more flexible plan. Consider setting up individual accounts as well as a joint account for incomes and payments.
These money management skills will not only help you to avoid future financial skirmishes; they'll also give you the tools you need to avoid other marriage problems. The key is to leave emotions out. Talk about each other's position, and then come to an agreement, Wrenn says. The rest will be icing on the anniversary cake.
Source: Rachel Hartman, Bankrate.com
The information contained in this article does not constitute a recommendation, solicitation, or offer by D2 Capital Management, LLC or its affiliates to buy or sell any securities, futures, options or other financial instruments or provide any investment advice or service. D2, its clients, and its employees may or may not own any of the securities (or their derivatives) mentioned in this article.
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