You think you know everything about your fiancé? Think again. Before you get married, you and your future spouse need to have the money talk first. It won’t affect whether or not you both say “I do,” but it might change whether you both agree to get a shared bank account.
In addition to maybe getting a shared account, here are six things you should talk about.
1. What kind of debt do you both have?
Did you both rack up a lot of debt going to college? What are your monthly car and student loan payments like? What is your debt-to-income ratio? If either of you has a lot, it’s best to say so before you tie the knot. Having the infamous “Where did all of our money go?” conversation is never fun and can lead to problems that extend beyond finances in a heartbeat. Know what kind of debt your future spouse has. It may suggest that you should either have separate bank accounts, or that one of you should be in charge of all finances so that credit repair can take place.
2. Know each other’s credit scores and histories.
A strong credit score is needed if you want to buy a house one day. If your spouse frequently misses payments because he or she doesn’t manage money well (and might need to fix his or her credit), it can put a big strain on your relationship. You should know what each other’s score is because it might change your respective responsibilities. Maybe one of you agrees to make all payments, or you add your spouse as an authorized user on an account to improve their credit score.
Looking over each other’s histories might also reveal credit errors. If you spot any, you’ll want to start a credit dispute as soon as possible. One reason is, if you plan on having kids, it’s a lot easier to fix a credit score when it’s just the two of you because you’ll have more cash every month to put toward payments. Another reason is that credit disputes and credit repair can take time. The sooner you begin the process, the better.
3. Will you need to work together to improve credit?
Do both of you suffer from low credit scores? If you need a loan, will either of you qualify? As stated, credit disputes and errors take time. To fix credit (or just improve credit), it may require a joint effort. To do so, you’ll both need to make a concerted effort. Not only will all bills need to be paid on time, but one or both of you might need to take out a secured loan or line of credit to begin the credit repair process. From there you’ll both need to diversify your lines of credit and begin paying down your debt.
Many experts suggest paying off debt from smallest to largest. This will remove some of your monthly obligations and free up more cash to throw at your larger debt.
4. What are your long-term goals?
Do you want to travel? Buy a house? Have kids? All of these are big financial commitments, and you need to know about them so you can start budgeting. Depending on the goals, one or both of you might need to make some spending changes. Impulse and fluff buys may need to be scaled back and a monthly budget put in place. If it’s a struggle to put away money each month, then you’ll need to establish a savings plan as soon as possible.
5. Should you have a prenup?
Unfortunately, approximately half of all marriages end in divorce. If either of you has worked hard to establish a strong financial portfolio, then a prenup may save you at least a little heartache if or when you two do decide to call it quits.
6. Establish a monthly budget and savings goal.
Come up with a list of non-negotiable monthly items—mortgage, car payments, credit card payments, utilities, etc. How much money must absolutely be set aside to cover everything? Look at how much is left over, and put a little aside for both of you to spend on fun items. The rest needs to go into savings. How much you spend on your fun (or unnecessary) purchases is up to you. If your partner considers something to be a must-have, but you don’t see it that way, consider not pushing it if it’s not too much every month. Everyone has their own quirks. However, if you are just scraping by every month and accumulating credit card debt in the process, it may be time to have a talk.
Get Expert Advice
Luckily, it doesn’t just have to be the two of you. At Ovation Credit, we’re here to help, too. For a free consultation, go to our site. We can help you improve your credit, fix any credit errors, and resolve any credit disputes.