The season of weddings is upon us and many young couples are entering into a new stage of life together. Money management though starts before the ceremony and will continue on throughout their married lives. Given that many studies indicate that “money” is one of the topics that creates issues and arguments in relationships it is prudent that partners spend time discussing financial planning issues between themselves and seek out an advisor who will assist them with their goals.
Although simple in nature there are a number of topics that should be looked at initially. For example many couples like to keep their finances separate while others will pool their resources. There is no right way or wrong way here but in my experience a blend of these two extremes seems to work best as each person maintains some financial independence and at the same time contribute to common objectives.
Although not envisioned right after a joyful wedding, it is a fact that a significant number of marriages will end in divorce. Given that fact it is important for each partner to track assets they bring into the marriage or assets that they acquire by way of inheritance during their marriage. If a breakdown does occur it will become important to trace and identify these assets in a settlement agreement.
Unfortunately, many couples begin their married life with debts. Things such as unpaid student loans, existing credit card debt or even debts related to the wedding ceremony itself could exist as they enter their new life. Depending on the type of debt and the income levels of each spouse they should put together a plan to reduce the debt load. It makes good sense to work at paying off the high interest rate debt first and then to set a goal to eliminate other loans.
Of ongoing importance in the relationship is the creating and maintaining of the household budget. Decisions should be made as to who is responsible for maintaining and tracking the plan, setting definite times for reviewing the plan together (if one spouse has been charged with managing the budget) . As well, this budget should contain a provision for building up emergency funds to avoid the use of debt in unexpected situations.
Finally, an investment strategy plan should start to take shape early if long term financial satisfaction and an economically rewarding relationship is to ensue. I recommend seeking out an advisor with whom you can establish a good working relationship with to assist you in providing solid advice to achieve the investment goals of the partnership.
Opening up these matters early in the relationship will definitely be a factor in the long term success of the union.