Noone predicts or even thinks about the possibility of a divorce when they’re getting married. Unfortunately, the statistics reveal that nearly 40% of marriages end in divorce.
Even if you’re not one of the unlucky ones, you still need to make financial decisions before tying the knot.
Doing so protects your assets and credit if your marriage doesn’t work out. It also allows you to start your marriage on the same financial page as your spouse.
Here are seven sobering financial decisions before you walk down the aisle.
1. Should You Protect Your Assets
Although no one gets into marriage intending to divorce, protecting your assets is vital if things don’t work out.
Even if you don’t have significant investments, a prenuptial agreement can be part of your financial planning. It allows you to decide how your assets will be divided in the event of a divorce.
A prenuptial agreement protects your interests, ensures both parties are on the same page and prevents arguments about money down the road.
Even if you don’t have much now, your financial situation can drastically change as you get older.
2. What Will You Do With Debt
Debt is one of the leading causes of divorce. It strains your relationships and causes arguments about money. Decide who will be responsible for each debt and make a budget to ensure it’s paid off promptly.
Have an honest conversation before tying the knot where you all disclose your financial situation. It will help you avoid any surprises down the road.
If you or your spouse have a lot of debt, it’s wise to pause the wedding until it’s paid off.
3. What’s Your Financial Goal
Do you want to buy a house, have kids, or retire early? It’s important to discuss your financial goals with your spouse before getting married.
This will help you develop a joint financial plan and ensure you’re both on the same page. If your goals are different, make adjustments to your budget or find a compromise.
Don’t forget to review your currently available income. Can it meet your growing family’s needs, or should you make changes?
Make sure you’re comfortable with your financial situation before taking the next step. Remember, your bills will continue to go up as you have children.
4. What’s Your Spending Style
Do you like to save or spend? Do you have a lot of debt or prefer to live paycheck to paycheck? Know your spending style before getting married.
It will help you develop a budget that works for both of you. You might need to adjust your habits to save more money if you’re a spender. If you’re a saver, loosen the purse strings to accommodate your spouse.
5. What Will Happen if Forced To Survive on One Income
For better or for worse, your spouse is your financial partner. If something happens and you’re forced to live on one income, will you be able to make ends meet?
Have an emergency fund in place to cover unexpected expenses. You should also plan how to manage your finances if one of you loses their job.
Now is the time to discuss ways to cushion or grow your income.
For example, if you have a stay-at-home spouse, can they get a part-time job? If you’re the primary earner, do you have life insurance if something happens to you?
6. Do You Have Separate or Joint Accounts
You and your spouse must decide how you’ll handle your finances. Will you have joint or separate accounts? It’s a personal decision with pros and cons.
Joint accounts make it easier to manage your finances and help you reach your financial goals quicker. However, they can also lead to arguments about money.
Separate accounts give you more control over your finances but make it challenging to manage your money as a couple. If you decide to have individual accounts, be extra careful about communication and budgeting.
7. Who Will Manage the Household Finances
One of you will have to be in charge of the household finances. This person will be responsible for paying the bills, managing the budget, and dealing with financial emergencies.
Decide who best suits the job and ensure they’re comfortable with it.
8. Open Communication is Critical
Financial misunderstandings are one of the leading causes of divorce. Avoid this by communicating openly about your finances and ensuring you’re both on the same page.
It’s easier to start the conversation before the wedding day, but if you haven’t had “the talk” yet, there’s no time like the present.
