If you are engaged you have most likely thought about where you are going to get married, what you’re going to wear, and probably even registered for wedding gifts, however, one thing you probably have not thought about is premarital financial planning. Now I know it doesn’t sound like the most romantic thing to be thinking about before you get married but there are many reasons to think about premarital financial planning and I’ll talk about the top 3 reasons here. The top 3 reasons for premarital financial planning are:
1) Make sure that both you and your fiancé understand the financial picture that you’re coming into the marriage with.
2) Open lines of communication around finances so you’re less likely to fight about them in the future.
3) Put together a plan for joint financial goals in the future.
Have a Clear Financial Picture Coming into the Marriage
Unfortunately, far too many people spend more time talking about what their wedding is going to look like than talking about their finances before getting married. I can’t tell you how many people I’ve spoken with who don’t even know how much their future spouse makes let alone how much they have saved or how much debt they have. I know that when you’re talking about getting married the last thing you want to talk about is your finances and might not even want to share everything about your financial past with your future spouse, but if you don’t have a clear financial picture of both you and your fiancé coming in the marriage, you’re setting yourself up for issues down the road.
Now as I’ve shared before my Husband is a financial planner so we started talking about our finances long before we were even living together, engaged, or married but I know that we are not the norm. And I do remember that it wasn’t the easiest thing to feel comfortable talking about with him, especially since when we first started dating, I had a lot of law school student loans and some other debt from taking the bar and starting my own business. But I also found that when we were both honest and upfront about our financial situations, we both knew what the other one was dealing with. And then once we were at the point of buying a home together and getting married, we both knew what our financial picture looked like and there weren’t any surprises. If my husband and I hadn’t discussed our finances, it could have become a stressful situation when we wanted to buy a house and had to disclose all our finances to the mortgage lender. Having a clear financial picture before we got married has made it so much easier during our marriage.
Open Lines of Communication
Working together before you get married to make sure that you both have a clear financial picture opens the lines of communication around your finances and as a divorce mediator, I know that one of the biggest issues couples fight about is money. However, it’s not really about the money itself because couples with lots of money and couples with no money both argue about it. It’s really about lack of communication and in my line of work, lack of communication is the biggest reason that people get divorced. Opening the lines of communication around finances also helps open communication generally.
When you talk about your finances and open the lines of communication it means that when issues come up you and your partner can deal with them together and not let them come between you. It makes financial conflicts easier to resolve because you have established a pattern of communicating and working together. Conversations around money can be stressful, but not talking about it and just brushing it under the rug only makes it worse. Often having these conversations on your own can be hard and working with a professional it can make the process easier having another party there to guide the conversations can help you both talk about your finances in a way you might not have been able to do on your own. Once you’ve opened the lines of communication, you’ll find it’s easier to bring up the concerns you have about finances instead of letting the issues sit and end up potentially resenting your spouse for something that you haven’t even discussed with them.
Putting Together a Plan for Your Joint Financial Goals
Premarital financial planning will allow you and your future spouse to put together a plan for your joint financial goals for the future. Whether you’re looking to buy a house, plan for a family or figure out how you can retire early putting together a financial plan will allow you to work towards those goals and have an actual plan for achieving them. Putting together a plan for your future helps you figure out what you need to do to reach your goals. Premarital financial planning takes you from your individual financial goals to putting together your joint financial goals. If you don’t have conversations around your future financial goals, then you may be working towards one plan while your spouse is working towards another plan. Having a joint financial plan makes sure that you and your spouse can accomplish your joint goals and both be happy with your plan to get there.
If you are looking for help having discussions around premarital financial planning, contact us to discuss how we can assist, and join me on my next blog when my Husband and I will discuss the importance of premarital mediation and premarital financial planning for your marriage. Coming from a couple who has professional experience as a mediator and Certified Financial Planner® as well as the practical experience of having these conversations, drafting a prenuptial agreement, and planning for our own financial future.
by: Amanda Singer