With wedding season already here, I thought I would share an essay I wrote a few months back, titled “The DOs and DONTs for engaged couples. This essay was shared on my friend Steve Stewart’s MoneyPlan SOS podcast episode #16 and here it is in written form. My wife and I followed these so called “rules” when we were engaged and we successfully combined our money once we were married. Please share your thoughts below in the comment section and if you have any questions please let me know. Enjoy!
Remember way back in middle school and high school when you had “the talk” with someone you liked and were hanging out with? Well, when it comes to engaged couples, I recommend couples have the “Money Talk” if they have not done so already. This is where you share all the details of your finances, both the good and the bad. How much do you make? What do you have in savings? How much debt do you currently have? All these questions need to be answered by both of you, no secrets allowed. It is amazing to me how many stories I hear from couples who were surprised to figure out on their honeymoon that combined they had over $50,000 in debt! Do not be surprised like that on a honeymoon, have the money talk right after you get engaged if you have not had it yet.
While you should have the money talk, never ever combine accounts, purchase something together, or pay each others bills before you are married. Until the preacher says “Now you are one”, it is “his” money, “his” debt and “her” money, “her” debt. The reason is simple: engagements do not always end in marriage and one of the worst things that can happen is you have to break off the engagement and you still own a car together with your ex! Yes, I know you are in love and you will not break off the engagement, but it still does happen from time to time. So just be patient and wait until you are married and then you can combine finances and it becomes “our” money.
Do #2: Make a Mock Budget
While you should not combine finances during your engagement process, you should do a mock budget together. Take each of your incomes and then subtract all your monthly bills from that and what is left is what we call disposable income. This will help you answer such questions as how much can we afford in rent, how much extra can be put towards debt each month, or how long will it take for us to save six months worth of expenses in an emergency fund. Again, the more you know ahead of time, the more you will be prepared when you start doing this money thing together for real.
Don’t #2: Blow off Big Disagreements
When I say Big Disagreements, I do not mean whether your eating out budget should be $100 or $125. I mean things like one of you believes in making purchases only with cash, while the other thinks it is ok to use credit cards. Or if one of you wants combined finances and the other wants to keep things separated, then you have some issues. I am not saying do not get married if you cannot agree, but unfortunately, one of the largest causes of divorce in America today is money fights. So if you can not agree on basic financial fundamentals by which you will live your life together, then you need to iron out the disagreements with a good pastor or marriage counselor, which you need to do anyways before you get married.
So, enjoy the engagement process. Have fun planning the wedding and savor getting to know your future mate during this unique period in your life. I know that the “Do’s” and “Don’ts” work because my wife and I did the “do’s” and avoided the “don’ts” during our engagement and have enjoyed having shared financial goals and being on the same page financially! So if it worked for us, it most certainly can work for you too.