Don't Say 'I Do' Yet: 8 Financial Actions Before You Get Married

You’ve finally met your soulmate. Love is in the air. Sunshine and rainbows everywhere.

However, love alone can’t foot the bills, put food on the table, or keep the landlord happy. How will you pay for that romantic dinner you desire?

How will you survive the financial adversities that come with the additional responsibilities of marriage?

Well, don’t fret. Here are 8 financial actions to take before you say ‘I do' :       

1. Schedule Regular Money Talks With Your Partner

Even though many couples shy off talking about their finances, talk regularly about money with your partner. Regular money talks can help you know each other’s financial situation. For example, how much debt both of you have. 

During the discussions, be open and honest. Discuss your income, debts, financial goals, and anything else relevant to your financial situation. 

Money talks are not a one-and-done conversation. So sit down with your partner at least once every month and discuss your finances. 

You can chat about how to save, invest, settle bills, and more! Having these conversations can help you avoid money arguments down the road.

2. Learn Your Partner’s Past and Present

You ought to know the assets and liabilities of your significant other. Ask them about their income, debts, and investments. This way, you’ll know the financial risks you’re associating yourself with.

Once you know what you’re dealing with, make informed decisions about your future finances together.

Besides, just like we have a relationship history, we also have a financial history. Our behaviour with money today is influenced by our past experiences. 

As such, when you merge your finances with your partner, you bring together years of spending and saving habits and beliefs about money.

If your partner is a spendthrift, they’re unlikely to change when you marry. Likewise, if they have nurtured good saving habits, they’re likely to stick with them. 

That said, you’ll probably have different financial priorities with your partner. If this is so, explore other ways you can compromise.  

3. Decide How You'll Manage Your Money

Both of you should play a part in managing your finances. Weigh your options and figure out how you’ll manage your finances.

Will you keep your finances separate? Are you going to have a joint account? How are you going to handle bills and expenses?

Here are some ways you can manage your money:

• Combining all your incomes and sticking to an already agreed-upon budget.
• Combining your accounts but each partner gets some money to use for whatever they wish.
• Having separate accounts.
• Sharing the bills 50/50.
• Split the bills by a percentage of each person’s income.
• Live off one income
• Split responsibility for certain bills

There’s no single best practice for managing your money. You can experiment with different strategies, combine different methods, or ditch all and develop a personalized plan. If you find what works for you, you’re setting yourself up for a successful marriage.

4. Create an Emergency Fund

Marriage comes with a lot of unanticipated expenditures. From the wedding itself to the cost of living together, there are a lot of expenses that can pop up.

So build a cash reserve to cushion against uncertainties such as:

• Loss of job
• Unexpected medical bills
• Car breakdowns

Experts recommend setting aside 6-12 months' worth of living expenses to help you during a rainy day. Where to keep this money is a personal choice. 

An image of a bundle of notes. /FILE

However, invest it where you can easily access it. You don’t want to wait for long before accessing your funds.

An ideal place to keep your emergency funds is a Money Market Fund (MMF). You can deposit and withdraw as many times as you want without restrictions. Besides, you can make withdrawals on short notice. Sometimes even within a day or two.

5. Get Life Insurance

Life is unpredictable. However, a life insurance policy gives you and your spouse peace of mind in knowing that if something happens to either of you, the other will be safe financially.

It can help to cover costs such as funeral costs, outstanding debts, and living expenses. And if you have children, life insurance can ensure they are taken care of too.

6. Create a Retirement Fund

Besides planning for your wedding and honeymoon, you also plan for your retirement as a couple. If you wait until after you’re married to start saving for retirement, you may find yourselves behind the eight ball.

A retirement fund will ensure you and your spouse enjoy a comfortable retirement. Follow these simple steps when creating a retirement fund.

1. Decide how much money to contribute to the fund each month.
2. Choose an investment vehicle for your retirement.
3. Monitor your retirement fund regularly to make sure that it’s performing well.

7. Decide Where You’re Going to Live

There are a few things to consider when deciding where to live before getting married. If you're both working, you'll need to consider your commute and whether you're okay with a long-distance relationship. 

If you have kids, think about schools, childcare, and the cost of living. You'll also need to decide whether you want to buy or rent. 

Ultimately, the decision comes down to what's best for you and your partner.

8. Set Joint Money Goals

Even before you start living together, set joint financial goals with your partner. This will help ensure that you’re moving in the same direction financially. 

However, your goals should be realistic and achievable. Otherwise, they might feel unattainable. To avoid this pitfall, figure out together how much each will cost.

Once you know, create a budget to see the impact of those goals on your lifestyle.

If adding a goal stretches your budget too much,  you can adjust your timeframe for achieving the goal. Extending the time frame will minimize the impact it has on your finances.

Wrapping Up

Marriage planning goes beyond planning for the wedding. You need to know how you’ll pay for your everyday expenses, rent, retirement, and much more. Planning for these in advance ensures you have a happy married life.

This article originally appeared on Money254. Money254 helps consumers and business owners to search, compare, and apply for financial products in Kenya.