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Getting married is an exciting time. From announcing the news to your friends and family, to planning a wedding and honeymoon during these uncertain times, you’ve got a lot to think about. So it can be easy to overlook one of the most important subjects that affects newly married couples: money.

Whether you are recently engaged or about to say “I do,” make sure that you and your significant other are on the same page when it comes to your financial future as a couple.

Why It Matters

Financial compatibility is very important for a happy marriage. A recent survey found that money is the number one issue married couples fight about. Although it can seem uncomfortable to talk about money with your partner, regular communication about each other’s needs when it comes to managing finances will help build trust in your marriage.

Before you get married and merge your lives – and your money – discuss the following items with your significant other:

1. Financial Mindset

Your attitudes toward money are shaped by your backgrounds and the way you were raised. Are you a saver or a spender? Did one of you grow up in a household where money was no object, while the other one’s family struggled to meet basic needs? Financial compatibility is important to minimize conflict. If you like to plan ahead for large purchases but your partner is an impulse shopper, that could cause trouble in your relationship down the road.

Remember to keep each other’s experiences and opinions in mind during the wedding preparation process. Understanding your partner’s priorities can make it easier to reach a compromise between what you want and what you can afford.

2. Debt

Are either you or your partner in debt? If so, what kind and how much? There is a difference between “good” debt (such as student loans or a mortgage) and “bad” debt (like using credit cards to live beyond your means). Do you know what the interest rates are for each loan, and how long until they are all paid off? Identify each other’s financial obligations, then come up with a plan to get and stay out of debt together. 

If either of you have a number of high-interest credit card balances, consider debt consolidation with a low-interest personal loan to help simplify your finances and potentially pay them off faster.

3. Credit

If the two of you dream of a major purchase together, like buying your first home, make sure one person’s poor or limited credit isn’t holding you back from this goal. A good credit score is crucial for obtaining the most favorable rates on auto, home, and personal loans.

You and your partner can request a free copy of your credit report from each of the three reporting agencies (Equifax, Experian, and TransUnion) every year. Review them carefully to make sure the information is accurate and there are no fraudulent accounts.

Responsibly using a credit card and paying off your bill each month can help you build and improve your credit score. If one of you has a lower score than the other, consider adding the person with poorer credit as a cardholder to the other’s credit card. It’s also possible to improve your credit by opening a secured credit card.

4. Managing Your Money

Do you want to have a joint account with your future spouse, or maintain separate accounts? Some couples open a joint checking account for their shared expenses (like the mortgage and utilities) and keep discretionary income in their personal accounts. If one of you earns considerably more than the other, you may want the higher earner to contribute more toward the household bills.

Create a budget together that includes both of your incomes and expenses so there are no surprises. Make sure you and your partner clearly define your financial responsibilities, such as who will pay which bills. And even if you do choose to keep your finances separate in different checking accounts, it’s important that both of you agree to not keep big financial secrets from each other. You don’t have to share details about every purchase, but some couples find it helpful to set a limit on the amount they can spend without consulting each other first.

5. Long-Term Goals

Now that you know each other’s debt and credit history, and have established a way to handle your finances as a couple, it’s time to start planning for your future together. Here are some topics to consider:

• Do you or your partner want to have children? If so, how many and when? The average cost of raising a child is over $200,000, and it is better to prepare for those expenses in advance. If one parent wants to stay home to take care of the kids, would that be possible? Determine if there are ways to cut back to live on only one salary in the future.
• If you would like to purchase a home together, create a timeline to outline the steps you will need to make your dreams a reality. Get out of debt, clean up your credit, and discuss how you plan to save for the down payment.
• What do you want your retirement to look like? If you dream of spending your golden years traveling around the world, start saving early. Knowing and understanding each other’s risk tolerance when it comes to investing can be helpful when planning for retirement.

If all of this seems a little overwhelming, don’t worry. You don’t need to figure everything out at once. Although it may not sound very romantic, consider scheduling a monthly date night to discuss your finances. As your financial situation changes and your goals evolve, ongoing communication will be the key to a happy, successful marriage.

How We Can Help

American Heritage Federal Credit Union has been helping our members achieve their financial goals since 1948. Whether you are interested in our personal banking services, a mortgage loan for your forever home, or assistance with retirement planning, we are here for you and your loved ones.