Saying ‘I do’ to financially wedded bliss
Did you know October is one of the most popular months to marry? Almost as popular as a June wedding. This month, you’re likely to see happy couples posing for photos before and after tying the knot. That day will mark the end of months of planning and, for many, the beginning of one of the most stressful conversations couples face—finances.
Wedding costs have increased quite a bit in recent years as couples focus on creating unique, personal experiences for their guests. In February, TheKnot.com released its annual Real Weddings Study, which captures detailed information on the average cost of a wedding in the U.S. The average cost of a wedding in 2016—excluding the honeymoon—was $35,329 even though the average number of guests dropped. In Manhattan (NYC), the most expensive city to marry, the average cost was $78,464 while those marrying in Arkansas spent the least: approximately $19,522.
The bottom line? If saving for a wedding wasn’t a financial goal leading up to marriage, newlyweds are likely to enter wedded bliss with the burden of debt.
A first step is to have an honest conversation with your significant other to determine your financial personality. If you haven’t already, sit down with your betrothed or spouse and have a heart-to-heart talk about your financial picture. This means discussing everything—salary, current savings and investments, assets and debt. This should also include a discussion about short- and long-term goals. Do you plan to go back to school for your MBA? Do you want children? Will you need or want a bigger house? When and where do you hope to retire? These are just a sample of the myriad topics up for discussion.
This conversation is a first step toward learning each other’s financial personalities. Everyone looks at money and finances differently, influenced by experiences and how they were raised, and those differences explain why conflicts may arise. For example, regarding wedding debt, one person may assume it will be paid off immediately to reduce interest payments while the other may be content to make payments over time. A couple’s entering marriage with an understanding of how they will approach finances is important.
From there, determine how to blend your finances and who will be responsible for day-to-day bills or long-term financial obligations. Decide a minimum threshold for big purchases that require a discussion with your significant other, so that a car showing up in the driveway one day doesn’t result in a big fight the next day.
Vows usually end with the line “until death do us part.” Yet, and understandably, most newlyweds don’t want to think about death. By addressing some of the less desirable financial decisions early, you may prevent the need for more difficult conversations down the road.
After saying, “I do,” change your beneficiary documents, including insurance policies, retirement accounts, benefits, wills, trusts, and any document that requires the designation of a next of kin. Give your spouse power of attorney and designate him or her as a healthcare proxy in the event of illness or disability.
Getting married is a monumental event that affects all aspects of your life, including your financial life. Talking to each other and learning to compromise can help ensure a smooth transition and help with the happily ever after…at least financially.