Getting married is one of the biggest and most important days of your life. However, before you walk down that aisle, there are a number of decisions you will have to make with your spouse, such as finalizing the guest list, selecting the perfect venue and securing the vendors! These are all considered par for the course with a wedding, whether large or small.
What you do after the ceremony and the fanfare is what will really determine how your marriage and future together will be.
A discussion on finances should come sooner rather than later as finances can be a major deal breaker. According to a 2019 study for example, more than 36.1% of study participants who ended up divorced cited financial problems as the reason.
We’ve compiled a checklist that provides a solid starting point for you to decide how you can approach this discussion on finance with your future spouse and ensure that you are both on the same page to ensure a happy future together.
BEFORE YOU SAY “I DO”
Making Major Joint Decisions
- Write a prenuptial agreement (prenup) – This document lays out how each other’s personal assets would be distributed should you file for a divorce. You should especially consider drafting one if you have either of the following:
- Children from a previous marriage
- A high personal net worth
- A successful business
- Personal ownership of property or other high-value assets
- A bad credit rating or accumulation of debt
- Lay all debt on the table – This includes any outstanding debt such as credit card, education, business or home loans. Work on clearing the ones that attract the highest amount and interest rate. This will help you to minimize the risk of having a bad credit score.
- Calculate your net worth – Your net worth can give you an accurate snapshot of your personal financial situation – To calculate this, firstly write down the value of your income and assets (i.e. checking and savings accounts, cash, CDs, investments, valuables). Then subtract this amount by your outstanding debts, salary deductions (i.e. NHT/NIS contributions) and regular direct debit payments (i.e. rent, insurance, utilities). Knowing this figure can help you to budget ahead for major expenses down the line such as purchasing a new home.
- Decide whether to combine or separate your finances – You could consider using a joint account for common shared expenses such as rent, groceries and utilities, but individual for other discretionary expenses.
- Assign responsibilities – Who will take care of regularly tracking expenses, monitoring investments and paying the mortgage, phone bills, taxes and utilities?
- Get to know each other’s financial style and habits – For example, are you a saver and your partner a spender? This is also a good opportunity for you to establish spending limits and make the decision whether to invest your money in stocks and bonds.
- Set a wedding budget – As newlyweds, you will never want to start your lives off by spiralling into debt. Simple ways to cut back include getting married during an off-season period, involving family and friends in the entertainment and DIY-ing your own decorations.
- Make a monthly budget – You and your partner should set aside time to keep track of your bills and to go over important financial decisions. One protip is to copy or import your banking transactions into an Excel spreadsheet to analyze your spending habits.
- Create a long-term financial plan – In developing a long-term plan, you will need to budget accordingly to the deadline set to achieve your goals – You may want to add the following to your list:
- Expanding your family
- Purchasing a new car/house or relocating
- Pursuing higher education
- Saving for retirement
- Vacationing as a family
- Putting aside money into an emergency fund (Consider pooling at least 5% of each other’s monthly income towards this savings plan)
- Update official documents – If your surname has changed, you will need to present your marriage certificate or deed poll to update the following records:
- Bank and investment accounts
- Insurance policies
- Government records – TRN/NHT/NIS
- Driver’s license and other ID cards
- Car/house titles
- Utility and other billing records
- Voter registration
- Employer records
- Medical records
- Update your beneficiaries on key financial accounts – Consider adding your spouse as a beneficiary to any of your savings, investments, insurance or retirement accounts. You could alternately designate those assets in your will.
- Create an estate plan – In the event of an emergency or death, it is important for you to meet with a lawyer to draft a will, as well as appoint a living trust and power of attorney.
- Review your insurance coverage – You may want to consider taking out a life, health or disability policy if it is not already covered by your employer. If you are aware of any sort of conditions that are hereditary in either one’s family, also think about long-term health insurance. As a married couple, you can additionally save on your premiums by taking out joint policies, but pay special attention to ensure there are no lapses in coverage.
Like the saying goes, a couple that plans together, stays together! Having regular money talks with your spouse is key to a happy debt-free marriage. Be sure to also check out our home and family articles as you map out your future together!