After your exciting engagement, you're inevitably going to have a lot of planning to do. While it may be tempting to jump headfirst into scheduling an engagement shoot or sending out “save the dates,” remember that financial planning should be at the forefront of your conversations as a newly engaged couple. Financial issues are a top cause of stress in marriages, so it’s important to set some time aside to establish a strong foundation in the beginning as you strive to build financial security as a couple.
1. Set Up a Savings Account
Depending on if you choose to have joint or separate accounts, it's important to set up some sort of savings account after your engagement for unexpected expenses that may arise. Maybe you and your partner are looking to buy a home in the future or purchase a big-ticket item. Even if you decide to keep your accounts separate, it's still important to be mindful of setting some money aside for an emergency fund. Having a savings account sets you up for financial stability and responsibility in your marriage and ensures that you have a place to draw money out of for any unplanned circumstances you may face as a couple.
2. Update Life Insurance Policies
Now that you'll be starting a married future together, it's important to have legal documentation updated in the way that you both see fit. Maybe you have a life insurance policy through work, but the amount would not adequately protect your future spouse, or you don’t currently have your partner listed as the beneficiary of the policy. Because you potentially could be combining finances and assets, you'll want to ensure that your significant other is sufficiently covered. Take some time to research different life insurance options after your engagement to secure the best policy for you and your future spouse.
3. Pay Off Credit Card Debt
Whether you and your partner have been together for years or just a few months, getting engaged is a special moment and the start of a new chapter. If possible, starting this next stage with a clean slate can help relieve some stress you may have about finances as you begin to prepare for wedding expenses. Take this time to be honest with your partner about any debts that you may have and work together to come up with a plan to try to tackle these debts as much as you can before the big day.
Addressing credit card debt is an important step in achieving financial security because credit cards usually have extremely high-interest rates and low suggested minimum payments — which can make it seem difficult to get ahead. There are different strategies for paying down credit card debt so look into a solution together about how to overcome this financial issue many have.
4. Create a Budget for your Big Day
Planning a wedding together might be the first large purchase you make as a couple. If so, you'll want to work together to come to an agreement about how you plan on funding the big event. Depending on how long you have to plan for your wedding as well as your financial situation, it could help to determine your forecasted budget early on and then allocate money aside each month to offset the cost. Planning early can help you to organize your wants versus needs and come to an agreement with your significant other about how you can plan your dream day without compromising your financial well-being.
5. Discuss Your Investing Philosophies
Maybe you're a seasoned investor or are just starting to look at different investment options. Either way, you'll want to have a conversation with your partner about where you stand on investing principles. For example, maybe one of you has experience with financial instability and prefers less risky investments, whereas the other one would rather build up a high-risk, high-reward portfolio. It's important to have this discussion early on to understand where your partner is coming from and the reasoning behind their personal investment philosophy.
This is also a good time to start discussing retirement and how you both plan on accomplishing the long-term goals you may have. For example, maybe you have a 401K through your company, but your partner prefers to also have a private IRA or Roth IRA account. Whichever option you choose for investing and retirement planning, it's important to remember that the earlier you start, the more likely you are to be stable and prepared for long-term financial security.
Remember that, while planning a wedding may be overwhelming at times, you're working together with your partner to create the best possible outcome for your future together. This is why it’s crucial to set some time aside after your engagement to determine your financial needs and goals as a couple. This ensures that you're on the same page moving forward about finances and can help you avoid one of the most common causes of stress and anxiety in a marriage. This financial conversation establishes good habits and forms a solid foundation to build upon in your future together. Congratulations on finding your happily ever after!