Although I generally focus my blogs on bookkeeping, payroll and sales tax topics, I thought I’d discuss having a conversation with your fiance in regard to finances as it can definitely have an effect on your business. Getting married is a wonderful thing, but I know from my own experience that couples often times have different ideas regarding finances. The time to discuss these issues (and resolve any problems) is before you enter into the marriage. Below are topics to discuss as recommended by Joshua Kadish of RPG-Life Transition Specialists.
- Credit Score: Poor credit may indicate that one person has money management issues. To improve bad credit, discuss financial mistakes and work together towards changing bad money habits, such as making on-time payments. Failure to improve a poor credit score can delay attaining financial goals such as qualifying for a mortgage loan.
- Yearly Income: Annual incomes should be discussed as it will determine what luxuries the couple can (or can’t) afford, where they will live and how bills are paid. Don’t forget to take into consideration a partner who makes significantly more or has a commission-based income.
- Savings: If your partner is living paycheck to paycheck, develop a plan that allocates money to an emergency fund. Ideally, you should have six months salary in the bank for an adequate financial cushion.
- Debts: If one person is bringing substantial debt to the marriage, it is imperative they do not attempt to hide it. Be upfront and develop a plan for paying off the balance.
- Bank Accounts: Determining whether bank accounts will be separate or joint before the wedding can prevent financial fights down the road.
- Health Insurance Coverage: Are you both covered under separate plans through your respective employers? You may want to look at which health insurance policy is the most beneficial and take advantage of the special enrollment period and join your spouse’s plan.
- Budgeting: Creating a family budget is an important task since your new spouse will contribute to various expenses. Evaluate your combined cash flow and determine how bills will be paid, money will be saved and finances will be allocated. Reaching a mutual agreement on spending will prevent financial problems from occurring down the road.
- Work Benefits: Consider how marriage may affect your employment benefits and insurance policies. Also review your employer’s pension plans. For example many employers provide 401k plans only for their employees, therefore, your soon to be spouse will need to be added as a beneficiary.
- Retirement Accounts: If your partner has not started saving for retirement, take advantage of accounts that will help your financial situation. IRA’s, pensions and other retirement plans should be evaluated along with other resources you may have. Be sure to establish the proper beneficiaries on these accounts so the assets will be dispersed appropriately in the event of an accident.
- Financial Goals: Consider your short-term and long-term financial goals as a couple. Buying a home, retirement and even investing styles are all aspects in which you should share similar ideals. Map out a plan that can help you reach your shared financial goals.
My final advice on this topic: make sure you are in agreement in the areas of budgeting/saving, who will be responsible for paying bills, and long terms goals. Going into marriage thinking things will change/get better/won’t be an issue after the marriage is ignoring the problems that will appear very quickly if not discussed. Money issues in your relationship can and may affect the money you can keep in your business to run successfully. Avoid seeing your business as emergency cash you take out when you run short in your family. I’ve seen businesses close because they took out cash advances due to family struggles and were never able to get back on their feet. Having a plan before marriage (although it won’t be able to be followed perfectly) will help you stick to your budget and keep you from many arguments once you’ve said “I Do.”
RPG – Life Transition Specialists™ is a wealth management firm that has been educating individuals going through a life transition for over 2 decades. You can find more information at http://www.rpgplan.com/
