Are you newly married, or about to be married? If so, congratulations! Now, we don’t want to worry you, but the first few weeks of your marriage will set a tone for the rest of your lives together. You want to start your married life off with smart, healthy habits!
If your marriage is ever going to run into trouble down the road, the reason why will likely be related to money. So before you both say “I do,” you and your partner should first discuss your finances. Here’s everything you need to know:
The first thing you two need to do is sit down and figure out where both you are, financially. Even if your financial life is a catastrophe, don’t hide anything from your future spouse. Be open and honest – that’s the only way to fix any financial problems.
You should each discuss your:
You each want to each obtain a copy of your personal credit reports. Your credit score is a snapshot of your overall financial health. Plus, reading your credit report is the best way to spot any errors.
As many as 40 million Americans have a mistake on their credit report. A mistake can directly impact your ability to make a major purchase such as a house or a car, so you want to make sure your credit report is accurate.
Now that you both know what you’re dealing with, you can create a budget as a couple. Hopefully, you’ll have some disposable income beyond your monthly expenses, which you can put towards both saving and paying off any existing debt. If you don’t have enough to put towards both, most financial experts recommend focusing on eliminating debt first.
Beware the old adage “two can live as cheaply as one” because it’s not always true. Create a budget which is realistic, and don’t be afraid to make adjustments as you learn to live together.
Learning to manage your finances as a couple can take some time to get used to. Bills can be easily overlooked. One simple way to prevent any problems is to set up automatic payments. Most services such as power, cable and other monthly charges have an auto-payment option.
Also, many loan services, especially for student loans, have an auto-pay option. Sometimes auto-payment even qualifies you for a small discount. Mainly, however, you can ensure your bills are paid on time, avoiding any late fees.
More than one-third of Americans have pretty serious debt issues. So if you’re in debt, know you’re not alone. The three most common types of debt are:
Fortunately, debt does not have to be a permanent problem. If you’re starting your new, married life with debt, here are some tips:
This typically applies to student loans. Many student loans will be split across multiple accounts. Your student loan might actually be a series of loans from different vendors.
With multiple loans, it can be difficult to track interest, due dates and other important information. Consolidating these many loans into one loan makes everything easier to manage. Plus, you might even be able to find a lower interest rate.
Not every loan can be consolidated, so you’ll likely deal with a few different creditors each month. You want to concentrate on the debts with the highest interest rate. Typically, the highest interest rates will be found on credit cards.
The idea here is to always work towards reducing the interest you owe, freeing more money for you to put towards the principal.
The “snowball” technique is when you order your debts from smallest to largest, and then pay off the smallest debts first. While this doesn’t always make the best financial sense, because you’re ignoring the interest rates, there can be a psychological advantage. As you eliminate debts from your lives, you’ll feel a sense of accomplishment. Ideally, this momentum will “snowball” and help you tackle your larger debts with confidence and determination.
By figuring out your financial future, you’re helping ensure a long, happy marriage. The secret is open communication. Once you know where each of you stands financially, you can take realistic, effective steps to create the future you both want. The sooner you and your future spouse can sit down and form a financial plan of action, the greater your chances of success. Here’s to many years of success!