Tying the knot. Jumping the broom. Balancing the checkbook? When it comes to marriage, most people are thinking about their future with their significant other, but how many people are thinking about their financial future?
You might be thinking, “Yeah, but my fiancé and I have that settled! We know how to pay bills!” Well, that may be true, but did you ever think of what it will be like to share accounts, budget for personal spending and take on new debt together?
There are plenty of subjects that affect credit, budgeting and savings in the household, like child support, repossessions, previous mortgages, bankruptcies and much more.
As you can see, there’s a lot more to ask your fiancé than “Will you marry me?” Our Nationally Certified Credit Counselors put together a list of questions that need to be answered before getting married so that you can get your married life off to a better start. Here are their suggestions:
What debts do each of you have?
When debt is brought into a marriage, it changes how much can be spent, invested and shared. It’s good to know where each side stands in terms of debt they’ve accumulated over time.
Talk to each other and find out what your financial situation looks like and if you’re comfortable sharing the other person’s financial obligations. If you’re up for it, both of you can meet with a credit counselor. They’ll help clarify the current situation and help you create a plan to meet your financial goals.
What is your credit score?
If you want to purchase your dream home or even purchase a new vehicle, it’s important that each of your credit scores are up to par. The scores will determine the amount, term and rate of your loan. If your spouse has a less than favorable credit score, you may end up having to put major purchases in your name to avoid paying double-digit interest rates while working to improve it.
Who will be in charge of paying the bills?
This decision should be discussed upfront so it doesn’t cause problems later on. If you feel more responsible, and you’re the type of person who prefers to have a handle on the money to see where all of your money is going, you’ll want to be the one in charge of paying the bills. If you figure out who has the responsibility of paying the bills before you get married, it can help alleviate confusion and limit future arguments.
Will we have joint checking and savings or keep them separate?
Some couples like to have separate checking accounts and share a joint for paying bills. Knowing how you will handle the finances can save you and your spouse from a lot of unnecessary headaches down the road.
Do you participate in your company’s 401K?
It is important for each spouse to save for retirement and to determine how much will be needed in order for both of you to retire.
What are our financial goals?
You both should be on the same page and work toward a common financial goal. If one of you wants a house and the other wants a long, expensive vacation, you’ll come into some disagreements about what to do with your money. Getting on the same page ensures that you have an idea of what you’d like to have saved up, and you’ll both be working toward the same goal.
How do your parents handle their money?
It’s said that our money values are influenced by our parents. It’s important to understand each individual’s attitude and feelings about money. While your parents may have emphasized putting money aside “for a rainy day,” some people may have learned differently. Find out the family financial history, and then you can work on talking about current and future feelings toward finances.
If your soon-to-be spouse pays child support, will your income play a factor in the amount that needs to be paid?
This is a possibility. While you are not responsible for paying child support if the children are not yours, you are responsible for the well-being of your spouse. It’s possible that a judge can consider your income in the amount available for the well-being of your spouse and may increase their payments
If child support is granted and your spouse-to-be does not pay it, can your income be garnished?
Even in community property states, your income cannot be garnished since you are not responsible for paying child support for children that aren’t yours. However, if your spouse-to-be does not pay child support and you own a house and have a bank account together, they can levy the account and put a lien on the house. If you get a tax refund from the government and file jointly, they can also take the tax refund from you.
Have you been married before?
Debts from previous marriages sometimes spill over into the second marriage. For example, your future husband or wife could still have credit cards that they co-signed for during their previous marriage, and that debt would be brought over into your new life together. This could affect or delay goals that you have set in a second marriage.
Have you gotten a mortgage before?
If you are embarking upon the home buying process together, this could be affected if the debt-to-income ratio is too high because a former home is still owned. Check to see if they still own property, and talk with them to see what next steps would look like to buy a house together. If their name is on a mortgage loan, it could affect your chances at getting your own house.
Do you have a tax lien?
A tax lien is a lien that is imposed on a property to secure a tax payment. It will have a negative impact on the credit score as well as drastically reduce a household budget cash flow when collected.
How do you feel about making loans to family members and friends?
Let’s say your brother or sister comes up to you one day because they really need some extra cash to get by until they get paid again or they want to stay with you for a little while. Should you give them the money or let them stay with you? Do you talk to each other first? If intended spouses have differences of opinion on this issue, you’re bound to disagree.
So before you say “I do,” make sure to conduct a financial interview with your spouse-to-be using these questions. It could save you a lot of headache and confusion later on down the road.
Have you talked with your spouse about any of these subjects? Let us know in the comments!
Once a Pelican State CU member, always a member—through life’s milestones, we’ll always be there to help you with your financial needs. Your Financial Family for Life. Give us a call at 800-351-4877.