Newly engaged or thinking of getting engaged? It’s an exciting milestone in life, and also one of the most important financial decisions of your life. Time to plan a wedding, add items to your registry, talk about honeymoon destinations, and have a romantic conversation about money.
OK, maybe not a romantic conversation about money, but the money conversation is one you need to have if you’re planning to get married.
Today couples are planning ahead more than ever because Millennials and Gen Z are more concerned with financial independence and stability than ever before. In fact, oftentimes financial insecurity acts as a “barrier to entry” when it comes to Millennials and marriage. A 2018 Pew Research Center study noted that 29% of Millennials surveyed had postponed marriage because they felt like they weren’t financially ready.
If you’re asking “How much money should I have saved before I get married?”, you’re in the right place.
Money and marriage go hand in hand.
Take the initiative to talk about finances openly with your spouse-to-be before you walk down the aisle. As couples getting married today tend to be more established in their careers before tying the knot, already having retirement accounts, accumulated debt, or even a mortgage, you probably have a lot to talk about!
If you are nervous, remember that talking about money doesn’t have to be intimidating.
Look to establish some boundaries and commit to keeping your discussion judgment-free. The goal is to have an honest, open dialogue about each other’s financial standing so you can make sure you are financially prepared to tie the knot.
Here are a few things you should cover in any pre-marriage money conversations:
With this information in hand, you are ready to put a dollar amount on how much you should have saved before getting married.
The truth is, there isn’t a cold hard number you should have saved up before you get married.
However, as reported by CNBC, most financial experts agree that each partner (i.e., both you and your significant other) should have roughly your annual income saved before getting married.
So, if you earn $70,000 a year and your partner $60,000, the experts say that, before walking down the aisle, you should have $70,000 saved and your partner $60,000. The logic here is that if your partner loses their job unexpectedly (or vice versa), you can cover living expenses for an extended period of time while they look for work.
It is important to note that when we say “savings,” we’re talking about total assets. Anything you’ve got to your name counts, from retirement accounts to property investments. If a year’s salary is out of reach, then try to create an emergency fund with the goal of saving six to nine months’ worth of expenses instead.
Remember, while this expert advice is a good rule of thumb, every individual’s financial situation is going to be different. The good news is that, once you and your soon-to-be spouse have had the “talk,” you both should have a better understanding of what your savings goal should be before getting married. For example, if you plan on renting for a few years rather than purchasing a home, it is highly unlikely that you’ll need a full annual salary in the bank.
Now that you know roughly what you need, let’s take a look at some tips to help you and your partner get saving.
The longer you have to save and plan for marriage, the better. In this section, we will cover some tips that can help you and your partner prepare for your financial future. Ideally, these strategies will be implemented prior to your engagement. But if not, don’t worry – they will help you save money all the same.
Budgeting doesn’t have to be a chore.
Today there are apps and automatic trackers to help you get the task done quickly. The most important part of a budget is knowing where your money is going. How much do you spend on going out to eat? What percentage of your income is going to rent or a mortgage? Without a budget, it’s too easy to lose money on things like unused subscriptions or banking fees. Stay on top of your monthly budget by monitoring expenses.
Pro Tip: look for a financial institution that offers a banking solution like the Flyp Visa® Debit Card. Debit cards allow you to stay on budget and only spend what you have. Most debit cards do not have rewards, but the Flyp Visa® Debit Card is different, offering up to 110% cash back! That could be money towards your rent or a tank of gas.
Making progress towards financial goals as a couple can bring you closer together. Do you want to travel internationally? Pay off your student loans? Save and plan for children? Buy a home together? It pays (pun intended!) to get on the same page with your partner.
Pro Tip: enlisting the help of a financial expert like an advisor can also help you make better decisions about saving for big goals.
Remember, money isn’t something you can discuss just once. A good strategy is to set some time aside each week to discuss money with your partner.
Think of this as a bonding opportunity! Consistent “date night” discussions with your partner will help you answer many important financial questions. For example, which of you will monitor accounts and which of you will pay the bills.
Pro Tip: Ease the tension by giving your partner more context on your relationship with money. For example, “Growing up in my house, money was…”
Getting married is a monumental life event and should be celebrated. Starting this moment with financial confidence is a great way to set you and your partner up for success. Remember to have the “talk,” and be diligent about working together to implement the savings tips discussed above.
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