Imagine those lovely candle-lit dinners after a tiring day at work or those adventures in Barcelona during a two-week vacation. All these are fond memories of your relationship. However, once you become more serious with your partner, you have to review you and your partner’s financial situation.
Marriage can be till debt do us part or till death do us part; the latter is a romantic fulfillment of your lives together, the former is a nightmare you want to forget. Before you tie the knot with your significant other, you have to deal with the tough question, “are we financially compatible?” Here are some questions you need to answer as a couple before you take those marriage vows:
Who earns more?
Times have changed. While in the past, being the man of the house may mean carrying the entire financial burden in the relationship, today that may no longer be the case. Women in the workplace can earn as much or more than men. Before getting married, you both need to be 100% comfortable about discussing your earnings with your partner and whether one earns more than the other should not be an issue.
How much debt are you carrying into the relationship?
Knowing how much assets you bring into the relationship is just one part of the financial equation. Liabilities are equally important. Once you get married, more likely than not, you will start sharing the responsibility of settling your financial affairs together, even for debt that you accrued before the marriage and you need to continue paying off well into it. You need to discuss all kinds of financial liabilities with your partner, whether this be a student loan, mortgage payments, alimony for previous marriages or even something as small as a payday loan you took out and have yet to pay for. Knowing these things will help you budget as a couple.
How many kids do you want to have?
Now comes aligning on the financial goals. One spouse may want a big family with four kids, the other might be happy with one child. You both have to be on the same page with the number of children you want to have, as your decision will impact your financial future.
You have to prepare for schooling, food, housing and other additional expenses of having a child or two.
How big will the house be?
Buying a home is a dream for most married couples; will your home be large enough for a big family or just at the right size for a small one? If you do not plan to have children, will you want to have a pool, a large living room or an entertainment area? You must think about these questions when you get married.
Take a good look at your finances and determine if you can afford your dream house. You have to consider the mortgage you have to get when you purchase a home. Will you settle for a fixed or variable term loan?
Post-graduate Degree
Do you or your loved one plan to get a master’s or doctorate degree? This decision affects your financial flexibility in the future, as one spouse might have to stop or work part-time. One spouse might need to take on extra work to pay for the mortgage, tuition, food and other expenses at home while the other spouse finishes their post-graduate studies.
Retirement Fund
The nest egg is important to the future of a married couple as they might not have children to help them financially when they can no longer work. Will both contribute to the retirement fund? Or will they create separate nest eggs because both spouses have jobs?
Marriage is not all about love, a couple must also consider if they are financially compatible before tying the knot.
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