From the moment “Will you marry me?” is asked, the number of hours that goes into planning, decisions, and details for the one incredible day where two people say “I Do” is intimidating. There is an endless amount of advice out there to help you plan your dream wedding. But the most important thing to focus on is you get to marry the love of your life and start a life together.
In the spirit of advice, here are three things I think you need to be aware of prior to your “I Do’s”:
- Something will go wrong on your wedding day, and it will not matter.
- Be sure to order the wedding album that was included in your photography package (I’m celebrating our second anniversary without our album).
- The planning does not stop after your wedding day if you want to live happily ever after.
I’ll leave the wedding planning up to the experts, but I’ll take full advantage of giving this advice: have the money conversation sooner, rather than later. By starting the conversation about finances early, you can hopefully avoid stressful situations down the road.
Think of your wedding as a “financial merge”—not a clean slate.
To start, compile a list of all your financial accounts, debts, and spending habits. The goal is to come up with a spending plan to which you can both say, “I Do.” This isn’t about you both starting over, but rather about deciding how to effectively merge your finances.
Next, determine your total income. Combine the amount of your paycheck(s) deposited into your bank account(s). If you are combining your finances, set up a joint checking account where you can send your direct deposits made by your employers.
Live by this golden rule.
Then, make a list of all previous obligations. Obligations include the expenses/liabilities for which you have already signed on the dotted line for and must make payments. Examples include mortgage or rent, car payments, student loan payments, insurance premiums, memberships, and utility bills.
Pay these expenses out of the joint account where your income is deposited. The golden rule is: “Income should be greater than these expenses.” Living by the golden rule leaves money for future and current spending plans.
Align your goals for the future.
Your previous obligations give you a great start to discovering where you stand today, now we can start focusing on the future. What dreams and aspirations do you want to accomplish in the years to come, and what role does money play? Such goals will likely include savings, education, or investment accounts necessary to help you fulfill your goals.
The easiest way to start is to agree on an amount to transfer from your new joint account and schedule these transfers regularly to savings or investment account. An emergency fund is a necessity for newlyweds, and you can build up to your goal amount using these transfers. For example, from each paycheck you receive, you set aside $500 for future spending. You can prioritize how much goes to things like your emergency fund, Roth contributions, home improvements, or vacation. It is not important for this amount to be the same for both spouses. The key it to agree upon the amounts as a couple. Once you have the conversation, you can start planning your next vacation, kitchen project, or even better stocking away funds for retirement.
Treat yourself to a little fun(d).
At this point, you’ve paying your obligations and are saving for your future goals. Whatever funds you have left can be allocated to your current spending, which accounts for things you need now or enjoy doing. Think: groceries, eating out, entertainment, and clothing.
My husband and I like to keep our own checking accounts for current spending. This way we can each choose what our current spending goes to, but we have already agreed upon the amount. We have a mutual agreement for spending on larger purchases. If a single purchase will cost over $250, we have a conversation about the purchase. More often than not, these purchases involve buying something for our house or something that is easily justified. By agreeing upon a purchase threshold, you can help alleviate money arguments.
The details on your spending plan are up to you, as a couple, but the process and conversations that go along with each step are a necessity for a happy marriage.
My husband and I just hit our two-year anniversary and I couldn’t be happier we started talking about money early on and that it’s a normal topic of conversation, instead of something to fight about. Your spending plan won’t guarantee that you won’t be thrown any money curveballs, but when those curveballs come, you’re better prepared and comfortable with what to do next. Just like all the time and planning that goes into an amazing wedding, start planning today to say “I Do” to your spending plan!
This post was written by a member of the Plancorp Women’s Initiative, which strives to advocate for clients and women in the community by addressing topics specific to their financial lives. For more information about the Women’s Initiative and how you can get involved, email firstname.lastname@example.org or visit the Plancorp Women’s Initiative page.