This month, we discuss what you need to know about money and marriage — specifically, what you need to know about paying for a wedding and what financial strategies you should consider implementing in the days after the ceremony. For example, who’s paying for the ceremony and what’s a reasonable budget for wedding bands? And, after the ceremony, how will the household bills be divvied up?
It’s vital that both partners disclose their entire financial pictures to each other. No matter how much you love the person you’re marrying, you need to understand the financial situation you’re getting yourself into. Consider getting your credit reports from all three credit bureaus and then sit down and really dig through them together.
A Prenup is More Romantic Than You Think
“Prenups” are often discussed negatively in popular culture. In an episode of Seinfeld, Kramer tells George that he can end his engagement by asking his fiancée to sign a prenuptial agreement. “Most women when they’re asked to sign a prenup are so offended,” Kramer says, “That they back out of the marriage.” As is par for the course for George Costanza, Kramer’s advice backfires and his fiancée laughs in his face.
“I make more money than you do!” she laughs. “Give me the papers. I’ll sign ‘em.”
George’s fiancée has the right idea. If one partner has significantly more assets than the other, or has a lot more earning power, a prenuptial agreement might be a wise move. Additionally, a prenuptial agreement might be a good way to protect assets intended for children from previous relationships. These agreements can also specify responsibilities for pre-marriage debts and can also spell out potential spousal support payments in the event of a divorce. By having hard conversations about money and debt before you marry, you may prevent problems from cropping up in the future – and pave the way for a happier, longer marriage.
This premarital meeting can be a great time to formulate a game-plan for paying down debt as a team if one partner has a higher debt-load than the other. Working together in a way that works for both partners, can really wipe out that debt much quicker. For younger couples, it seems very likely that student loan debt could be a major issue, so it may be a good idea for couples to work together to attack debt, even if most of the debt comes from one partner.
Who Pays for the Wedding?
Weddings take a lot of careful financial planning. Without a good financial strategy, wedding expenses can quickly balloon out of control and that’s a dose of bad news for whoever’s picking up the tab. And, if you’re nearing retirement age, paying for a child or grandchild’s wedding can have serious implications for your retirement strategy. Be sure you can afford to chip in before you commit to covering the costs of someone else’s big day.
If you’re paying for your own wedding, consider how much debt you are willing to take on as you start married life. Is a lavish destination wedding going to limit your ability to save for a house? Could you go on weekly date nights as a married couple for the cost of that designer gown? Remember, the wedding is just one day. It may be wise to scale back the trappings of a dream wedding so that you can put some of that money toward all the days that come after the big one.