Marriage and Finances: What You Should Know Before You Say “I Do”

When you say “I do” to the one you love, you are also saying “I do” to sharing responsibility for your finances as a couple. Even if you both decide you would like to keep your finances separate, how you handle money once you are married can affect one another and the health of your marriage. So take the time before you say your wedding vows to discuss your current financial status and your financial goals for the future.

Figure Out How Much Debt You Both Have

One of the most important financial considerations when getting married is figuring out how much debt you both carry and how you plan to pay it off. Here are some questions to consider as you assess how to handle your debt once married:

• Will you merge your debts and pay them off together?
• Will you pay off your debts separately from your own earnings?
• What happens should one of you lose your job and need help paying off past debt?
• In the event you decide to have children and one of you stops working to care for them, how will that person’s debt be handled?

If you have a lot of debt between the two of you, you will need to devise a plan for paying it off. Some strategies include paying more than the minimum due each month, using cash only, lowering your spending, and increasing your income by getting a second or better-paying job.

For more ideas on how to get out of debt, check out the Federal Trade Commission’s article “Coping With Debt.”

How Will You Handle Your Finances Together?

As a married couple, you may share dreams for your future that will more than likely take money to fulfill. In order to achieve these dreams, you will need a solid financial plan.

In order to create a financial plan, you should assess your dual income, debts, expenses, and savings goals. With these numbers, create a budget that allows for fulfilling the dreams for your future. For help with personal budgeting, go to www.mint.com or www.pearbudget.com.

One option is to hire a professional financial planner who can help you establish a financial plan. Consult organizations such as the National Association of Personal Financial Advisors or the Financial Planning Association to find reputable financial planners in your region.

Joint or Separate Bank Accounts?

Part of creating a financial plan for your future is determining if you are going to merge your money and put it into joint checking and savings accounts, or if you are going to have separate bank accounts. This decision should be based on what works best for you both.

Some people like to manage their finances jointly and others prefer a more independent system of tracking their own money and contributing to the bills in an equitable way.

When deciding to have joint or separate bank accounts, consider who will be in charge of paying the bills. One of you may enjoy managing the finances and one of you may be happy to have the other handle them. Or you both may want to be part of the process. However you decide to handle your money, it is wise to discuss it before your wedding day.

Credit Scores Do Matter

Your credit score is a number — usually between 300 and 850 — that reflects how you have handled your finances as compared to the financial histories of thousands of other people. When applying for a loan or a mortgage, banks look at your credit scores to get an idea of how creditworthy you are. If you are applying for joint credit, which is often necessary for big purchases like a home, you both need good credit scores.

Even if your credit score is high, you could get turned down or only qualify for costlier credit if your spouse’s credit score is low. So if your goals include making large purchases together, you need to look at one another’s credit scores and work on making yourselves attractive to lenders.

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