Credit Tips for Engaged Couples
Understanding and communicating with your spouse is critical in all aspects of married life, but especially when it comes to credit issues. All engaged couples should spend significant time discussing and exploring how they plan to handle their finances, what their credit looks like, how they’ll pay their bills, and what their long-term financial goals are. Arguing over finances can end the honeymoon phase prematurely.
Identify and agree on your major money issues
If you’re soon to be married or partnered (or even if you already are and haven’t yet talked money), you need to openly discuss money issues, including your current credit and financial status. If you could live on love, the conversation would be unnecessary, but if you two pool your resources, you need to determine together how your credit and your money plans will affect your lives as a couple.
Here’s a list of ten things to do before your “I do” day. If you’ve already taken the plunge and you haven’t yet discussed these issues, do it now!
Show each other your credit reports and credit scores. Discuss what you see, but don’t judge.
Discuss your current annual income and your income hopes for the future. This is a chance to show support, not to criticize.
Determine your financial style — are you a saver or a spender? Find out the same about your partner.
Talk about your debts and how you plan to handle them. Will you each pay your own debts? Will you pool them together and split them 50-50? Or will the bigger earner pay more?
Tell each other about any major negative financial events in your past. These events may include outstanding (or defaulted) student loans; for those in second marriages, the effects of a bankruptcy may be around longer than the kids, and you wouldn’t forget to talk about them.
Discuss your spending habits (whether you’re frugal, indulgent, or don’t even know how to budget). The frugal one may be the better choice to handle your bill paying.
Talk about whether you’ve cosigned any loans. Cosigning for an old flame may be forgiven, but hiding it won’t.
Discuss your personal approaches to budgeting. Will you count every penny or go for estimates instead? Yes, you need a budget!
Discuss your financial goals for the next five years. Make this exercise fun. After all, it is about dreams and hopes. No wet blankets allowed!
Talk about your long-term financial goals and how you’ll fund them. Will you retire at 50? Sail around the world? Give all your worldly possessions to charity?
It’s a good idea to get copies of your credit reports when your relationship turns serious. Credit is a critical relationship factor, and bad credit can be a deal breaker. You may have bared your heart and soul to your sweetie, but until you bare your credit, the job’s not done.
Build a budget for your new life together
It is strongly recommended that you and your partner sit down and make out a budget for your new household. Budgeting is among the most important first steps you can take together to strengthen your relationship and reduce the risk of a split due to financial stress and spending incompatibility.
Explore together and agree on what you want to save for, such as a family, a house, a cat or two, or early retirement. This discussion paves the way for all the saving steps you want to establish in order to reach your goal. You also need to budget for the everyday stuff (utilities, transportation, food, housing, and the like).
If you find that you just aren’t able to get the numbers to add up, consider a credit counselor. Good credit counselors aren’t just for credit, debts, or problems — they can help you plan a budget before disaster strikes.
When working on your budget, always start with the fun part: your future goals. What could be more inspiring than describing all the things you’re going to do and the adventures you’ll share together over the years?
By committing to maintaining communication, establishing common goals, and working together for mutual benefit, couples can achieve financial bliss.