Your wedding is supposed to mark the moment two people launch the rest of their lives as a team.
Careers, housing, finances, family, religion, even what to cook for dinner: every decision that the couple makes, from their wedding day forward, they make together … at least that’s how the story goes.
But marriage can be … well, romanticized. Many couples disagree on the big stuff: Should we live in Denver or Manhattan? Should we have one child or four?
And of course, almost every couple will disagree about money. One partner might be a spender while the other is a saver. One might prefer risky investments while the other prefers Treasury bonds.
Even if both are cut from the same cloth – let’s say they’re both risk-averse savers — they might have different comfort thresholds. She wants an emergency fund that represents 6 months of their income, while he thinks an emergency fund of $2,000 is good enough.
Here are a few financial conversations couples should have before tying the knot:
1. Talk About Dreams and Goals in Life.
Money is simply a tool to get to your dreams, so the backbone to most money conversations is sharing dreams and goals.
Let’s assume a scenario in which she wants to create a stream of passive income by age 45, while he wants to send their kids to the city’s best private school.
At first, the couple won’t think they have a money problem – after all, they’re both saving and living frugally.
But when Junior turns 5 and it’s time to enroll him at OverAchievers Prep Academy, they’ll see that their frugality was geared towards different goals at different timelines.
Iron out these life goals with your partner by discussing the goals, writing them down, tracking your savings towards them, and re-visiting the goals once a year.
2. Talk about Thresholds
Most people have what I call a “money threshold” after which they start feeling antsy about their finances.
Spenders might have a “maximum debt” threshold. As long as the balance on their credit card is less than $2,000, they feel okay. Once it crosses that $2,000 mark, they start feeling antsy.
For savers, it might be a “minimum savings” threshold. Once their emergency fund dips below $5,000, they get nervous.
Most people aren’t consciously aware of their comfort thresholds. Identify what thresholds you have, and discuss it with your partner.
3. Agree on Life Plans
If a major, life-altering decision is in discord, couples will disagree on every detail that’s affected. Let’s say he wants to stay in Denver, where they both grew up, but she wants to move to Manhattan. Do they buy a home in Denver? Or do they keep renting, in case they move across the country?
Let’s say she only wants one child and he wants four. Should they buy a larger home than they currently need, in case their family grows? Or should they buy a townhouse in case their family stays small?
It might seem like the couple is disagreeing about real estate, but the crux of the matter is that they disagree about their life direction. Solve that first, and the money will follow.
This Guest Post was written by Paula Pant at AffordAnything.org, the website that shows you how to afford … well … anything!
My name is Derek, and I have my Bachelors Degree in Finance from Grand Valley State University. After graduation, I was not able to find a job that fully utilized my degree, but I still had a passion for Finance! So, I decided to focus my passion in the stock market. I studied Cash Flows, Balance Sheets, and Income Statements, put some money into the market and saw a good return on my investment. As satisfying as this was, I still felt that something was missing. I have a passion for Finance, but I also have a passion for people. If you have a willingness to learn, I will continue to teach.