Connecticut Better Business Bureau says discussing financial plans is an essential task for couples, long before they walk down the aisle.
While talking about finances is not romantic, it can help prepare to buy a home, raise a family, and be ready for emergencies and retirement. The best time to start the discussion is as soon as a couple is serious about spending the rest of their lives together.
Individual debt, foreseeable expenses and day-to-day money management can have a positive or negative impact on whether a couple can obtain credit, how much credit and associated interest rates.
Money management preferences vary widely, starting with whether couples prefer to pool all of their income or have a joint bank account for bill paying and separate accounts for personal expenses.
The bottom line is that couples must get their financial house in order before tying the knot.
Better Business Bureau recommends couples follow a checklist for discussion:
Calculate existing debts – Before moving forward, couples have to add up the debt they bring into the relationship, ranging from student loans to car payments and credit card debt.
Check your credit reports – Visit the government-sanctioned site AnnualCreditReport.com to receive your credit reports for free, with no strings attached. Look for anything that may lower your credit scores, such as too many open lines of credit or inaccurate information. If you find any errors, move quickly to correct them with the credit reporting companies Equifax, TransUnion and Experian.
Discuss your goals –Although plans change over the years, discuss major expenses, from the cost of a home to raising a family.
Ask yourselves where you’d like to be financially five, ten and 15 years down the road. It is best to re-examine these goals periodically to take into account your financial situation as it changes. Don’t forget to include big ticket items such as cars, home furnishing and emergencies. These can help you calculate how much disposable income you will have for savings, kids’ college tuition and monthly bills.
Plan for emergencies – Experts typically recommend that every couple put aside at least six months of net salary from the household’s highest wage earner in an emergency savings account. This can help in case of job loss, health problems, disability and unexpected car and home repairs.
Life insurance – In the event of the loss of a spouse, a life insurance policy can help pay off a mortgage and other debts such as raising children and putting them through college. The younger you are when you purchase a policy, the less expensive the premiums.
Plan now for retirement – Take advantage of both of your employers’ retirement plans, even if you can only make a small contribution. You can also arrange automatic transfers from a checking account to a savings account on a regular basis.
All of these preparations can help you avoid many common financial stresses, allow you to have a clearer picture of your future and provide essential information if you decide to consult a financial planner.
Founded in 1928, BBB Serving Connecticut is an unbiased, non-profit organization that sets and upholds high standards for fair and honest business behavior, and is one of 112 local, independent BBBs across North America.
For more than 100 years, Better Business Bureau has been helping people find businesses, brands and charities they can trust. In 2013, people turned to BBB more than 132 million times for BBB Business Reviews on more than 4.5 million businesses and Charity Reports on 11,000 charities, all available for free at bbb.org.