“What’s mine is yours!” It’s a lovely sentiment, but with your pending marriage it becomes a lot more. On the positive side, you will most likely have the added financial security of additional income, new insurance options, perhaps some additional investments. On the other hand, your fiancé may also be bringing personal debt in the form of student loans, credit cards, mortgages. When you marry, so does your debt and your assets.
If your combined finances are complicated, either person has an especially high income, or an especially high debt level, you may want advice from a professional. But there are many simple things you will want to consider now and decisions you should make together before you marry.
First you need to discuss all the facts. As unromantic as it sounds, now is the time for a session of “truth and consequences.” Drag out all the facts, positive and negative. Look at the potential of your combined debt and combined income and assets. This is a good time to set realistic goals and establish a budget. Do it early. It may affect your wedding, honeymoon or residence plans.
There are lots of opportunities to save money at this point. Auto insurance is often lower for “married” drivers and you can enjoy an overall savings by putting all your cars on one policy. Health insurance is another consideration. If you are both covered through employers, compare your costs and benefits. This is especially important if you plan to have children together, or either of you already has children.
This is also the time to take a good look at your combined credit card usage and debt. (Scary, but necessary!) Don’t just add his and hers. Keep the lowest interest rates and get rid of those annual fees. If you can, transfer your current debt from high to lower interest cards. Include a debt reduction amount in your budget and start paying off your cards.
Develop a savings and investment plan. A little money now is easier to find than a lot of money later. And the earlier you invest it, the more money it makes for you. You will need a short term emergency fund to cover unexpected expenses; a mid-range investment fund for specific needs like purchasing a home, college education for children, or perhaps your dream vacation; and a long-term investment fund to provide a lifetime of security. After all, with any luck, you two will retire together someday.
Investing to meet your goals is probably the hardest for most people. Consider a forced savings plan, like payroll deduction, to get you started. If you don’t have time to do research, get help with your investments. A financial advisor or investment counselor can make all the difference. You don’t have to be wealthy to take advantage of professional help, and if you’re like most people, you could use a lot of good advice.
If you don’t have life insurance, have a professional assess your situation. If you do have life insurance policies, retirement funds, or other transferable assets, make certain you change the beneficiaries and ownership records.
Discuss your priorities openly. Is life unbearable for you without a vacation cruise every year? Is your wardrobe an important part of your personal self-esteem? No value judgments here. Be honest about what matters to you or it will come back to haunt you later.
After all, this is real life. Your financial security can have an enormous impact on your emotional security and your relationship. All those dry unromantic numbers eventually translate into “quality of life” for the two of you.