03 Nov Guest Blog: The Importance of Premarital Financial Planning
When working with engaged couples, we discuss the importance of open communication regarding money matters. Often, couples don’t know the questions or topics they should be discussing before walking down the aisle. Below, our friends at the San Diego Family Mediation Center tackle six important questions each partner should ask. This post originally appeared at sdfmc.com.
In the past few years I have attended countless weddings, I guess that’s what happens when you’re in the your thirties and everyone is getting married. When friends have gotten married there’s all this talk about what their lives are going to be like together and the excitement of the wedding, but what I rarely hear about is them having important conversations about their finances before they get married. Too many of my friends don’t know enough about their future spouses financial situation. Finances play a big role in relationships and arguments around money and finances are the number one issue that we see in our divorcing clients and premarital financial planning can help. Having some fairly simple conversations about money can save you conflict and heartache down the road so it’s surprising that more people don’t do it. When I ask friends why they don’t talk about money I hear that it’s awkward and uncomfortable or that they don’t want to pry into their partners life. However, what they’re not thinking about is that it’s their life going forward too.
I know that talking about finances is not the easiest nor is it enjoyable, my boyfriend and I have had many conversations about our finances and they’re difficult, but I also know that having these conversations gives us a higher chance of not arguing about the issues later. Now my boyfriend works in the financial planning field and I work with many divorcing couples so we’re both certainly more aware of the conversations to have; however that doesn’t mean you can’t easily have these conversations with your future spouse. Here are six important questions to discuss before you get married.
What is your current net worth?
You need to sit down and be honest about your current debt and calculate your assets to understand where you will stand financially together.
What is your credit score?
You should both run your credit report and credit score and share that with your partner. Your credit score can impact your ability to purchase and get credit down the road.
How much do you both make?
Knowing how much your partner makes will assist you both in creating budgets and determining your financial goals.
What are your spending habits like?
Are you a frugal penny-pincher, excessive spender or somewhere in between? When you combine two people’s spending habits it can clash so it’s helpful to know upfront how your spouse spends.
How was money discussed when you were growing up?
How we were raised and how our parents felt and discussed money can impact our relationships going forward.
What are you short and long term financial goals?
You may want to plan for a big trip next year and your partner may want to save to buy a house. While these goals aren’t incompatible planning needs to happen for them all to occur.
San Diego Family Mediation Center (SDFMC) helps families deal with conflict constructively and find ways to improve communication, solve problems, and reach agreements on legal and non-legal issues. All SDFMC mediators have extensive mediation training, divorce financial knowledge, and experience mediating many different types of family cases. For more information, visit www.sdfmc.com.