Wedded Bliss & The Balanced Budget

Your financial statement isn't exactly romantic but it's something you need to talk about long before the wedding date is selected. That conversation should start as soon as you begin discussing your personal goals -- because money is a factor in everything.

For instance: what type of wedding will you have (a big hall with all the trimmings and a giant price tag or a small gathering); how many children do you want? (Because an only child is easier to finance than that party of five.); Where do you want to live? (That big house in the suburbs is more expensive than the one-bedroom, four-floor walk-up apartment); When would you like to retire and how are you going to finance those golden years (401 K? pension? IRA?). "Couples who are unable to reach mutual financial goals and stick with them will undoubtedly have bumps in the road," says Katie Kiihnl Leonard, a partner and family lawyer with Boyd Collar Nolen & Tuggle in Atlanta, GA. "By addressing these issues at the starting line, couples can avoid a lot of headaches that frequently arise in marriages."

Not every financial goal will ask you to look so far into your future. A couple should have short-, intermediate- and long-term goals prior to their wedding day, and these should be re-evaluated periodically as values and circumstances change in your life. Your first short-term goal should concern those wedding expenses. "Weddings cost tens of thousands of dollars, and while it will be a day you'll never forget, you shouldn't start off your marriage in debt," said Beth Hardeman, Chief Consumer Advocate at Credit Karma. "Keeping a budget can keep you from overspending and allow you to prioritize what really matters." Try to focus on what is important to you as a couple on that big day and what can be eliminated from the budget.

Your financial statement isn't exactly romantic but it's something you need to talk about long before the wedding date is selected. That conversation should start as soon as you begin discussing your personal goals -- because money is a factor in everything.

For instance: what type of wedding will you have (a big hall with all the trimmings and a giant price tag or a small gathering); how many children do you want? (Because an only child is easier to finance than that party of five.); Where do you want to live? (That big house in the suburbs is more expensive than the one-bedroom, four-floor walk-up apartment); When would you like to retire and how are you going to finance those golden years (401 K? pension? IRA?). "Couples who are unable to reach mutual financial goals and stick with them will undoubtedly have bumps in the road," says Katie Kiihnl Leonard, a partner and family lawyer with Boyd Collar Nolen & Tuggle in Atlanta, GA. "By addressing these issues at the starting line, couples can avoid a lot of headaches that frequently arise in marriages."

Not every financial goal will ask you to look so far into your future. A couple should have short-, intermediate- and long-term goals prior to their wedding day, and these should be re-evaluated periodically as values and circumstances change in your life. Your first short-term goal should concern those wedding expenses. "Weddings cost tens of thousands of dollars, and while it will be a day you'll never forget, you shouldn't start off your marriage in debt," said Beth Hardeman, Chief Consumer Advocate at Credit Karma. "Keeping a budget can keep you from overspending and allow you to prioritize what really matters." Try to focus on what is important to you as a couple on that big day and what can be eliminated from the budget.

By knowing your future goals, you'll also make better decisions while organizing your honeymoon. "For example, saving for a down payment on a home may require you to forgo the exotic honeymoon you were dreaming of, or you may decide to put the house off for a year or two so you can create an amazing memory," says Michael Russelle, a financial solutions advisor at Merrill Edge in Chicago, IL. "Either decision is fine as long as you both agree it's what you want and how you will pay for it. If you don't discuss that ahead of time, one of you may be disappointed."

FOR BETTER OR WOR$E

When you marry another person you also become part of their financial profile ... and their debt. Before the marriage, every couple should have an honest discussion about their finances - and you should know one another's credit score. If either of you owe money, you'll want to develop a payment plan. First, you'll want to eliminate credit card debt, which often has expensive fees and no tax benefit unlike a mortgage, and then move on to other expenses, such as school loan s. "Debt consolidation is a serious topic that needs to be addressed early on and frequently," says Tiffany Welka , vice president of VFG Associates, a financial planning firm in Livonia, MI. She offers three tips to help with debt:

1.   Always pay the minimum on time.

2.   If you can, pay more than the minimum amount required, always starting with
      the highest-interest loan first.

3.   When paying more than the minimum amount required, make sure that your extra
      amount goes towards the principal, not the interest.

You should also talk about how you are going to merge finances once you're married. Will you have a joint checking account? Two accounts? Hardeman suggests setting some ground rules first, as well as decide who will manage the banking. "It's easy if the joint account will be for emergencies or vacations, but one shared account for bills or general expenses could lead to miscommunication or overdrafts if you're not careful," she says. "Having someone manage all the bills or making sure the same bills are paid each month by one person can help prevent mistakes."

Keep in mind that there is more than one way to consolidate a couple's financial life-find what works for you. "Everyone enters marriage with a unique set of attitudes toward money," says Pam Friedman, author of I Now Pronounce You Financially Fit: How to Protect Your Money in Marriage and Divorce. "Your goals should be to be open and listen to how your partner views, spends and saves money. Dig a little deeper by sharing how your parents managed money.... Knowing how your spouse views money and investing is important to creating a plan together."

WEDDING MONEY BONANZA

Pay off credit card debt? Buy a house? Save for the future? These are all good options for your wedding presents. According to Leonard, how you use those dollars depends on your financial goals and which one is most important to you. If you want to lower your debt, pay off the highest interest rate first then go to the smaller amounts. That will immediately give you some breathing room in the monthly budget. If your goal is to buy a home, put the money directly into savings, or a short-term, low-risk investment vehicle with easy access, such as a money market account. If your goal is to invest, meet with a financial advisor or planner to determine your options.

You also can't go wrong putting away three to six months of living expenses. This extra padding can get you through those inevitable bumps in the road. "Money is one of the most popular wedding gifts," offers Welka. "Because of this, newlyweds oftentimes believe that they are now 'rolling in the dough.' Although there are no strings attached to this gift, no recommendations of where it should be spent, couples need to remember why they were given that gift in the first place: What could these couples use this money for that would benefit their marriage together for the long term."

BUDGETING 101

You'll want to find a system that works for you. First review your expenses (both fixed, like your mortgage, and variable, such as your entertainment allowance) and also write down future financial goals, such as buying a house, saving for retirement, etc. "Make a list to figure out how much you spend every month on necessities (rent, mortgage, insurance, utilities, groceries) and how much you spend on discretionary items (travel, dining out, shopping, manicures, fancy coffee drinks, etc.)," says Michelle Brownstein, director of private client services at Personal Capital in San Carlos, CA. Next, see what can be eliminated. Do you have a gym membership that you don't use? What about all those streaming services? Small changes can have big effects on your finances.

When it comes to managing day-to-day finances, couples need to figure out how to divide the expenses. "Even if both individuals are employed, they may not want to divide the bills down the middle," suggests Russelle. "For example, if one individual has a higher salary, he or she may take full responsibility for the housing costs, and the other could cover additional monthly expenses."

Speaking of bills, you probably want to break down big expenses into monthly ones. "To repay major debt like student loans or your mortgage, treat them like utility bills,"  suggests Hardeman. "You probably never forget to pay your electricity bill each month so plan accordingly and add your loan payments to your budget, too."

To protect the couple financially during the marriage, Leonard suggests, each get life insurance. "Protecting your spouse and children should be a big priority," agrees Kyle O'Dell, Managing Partner at O' Dell, Winkfield, Roseman & Shipp in Denver, CO, who purchased a large life insurance policy after discovering his wife was pregnant "to make sure my family would be taken care of in case something ever happened to me."

Occasionally, couples should check in on their long-term goals to see if they are on track financially. You might need to make changes to your strategy. "Take a step back and look at your spending every quarter," suggests O'Dell. "If one of you is a big spender, you may even want to look more often. This can be like getting a root canal for some, but the regular evaluation of spending will almost always highlight areas where you can streamline undesirable money habits."