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Newly engaged couples urged to have “the money talk”

Know your partner's financial state before saying, “I do”

Jan. 05, 2016

Tens of thousands of Americans got down on one knee over the Christmas and New Year’s holidays to propose to their significant other. According to a recent Facebook study of engaged people on the social media site, even more men and women will agree to wed next month, on Valentine’s Day.

While most people spend months if not years planning and purchasing for their big day, far fewer engaged couples spend time talking about their finances with their fiancé.

A recent COUNTRY Financial Security Index survey found that only 54 percent of those who are engaged are in the know about their partner’s debt. Two-thirds of Americans who are just dating or single say they were unwilling to date or marry someone who has significant debt.

That’s why COUNTRY Financial is encouraging couples to do some talking before saying, “I do.” Doing so could mean the difference between marital bliss, broken hearts and money disputes later on.

“Debt has become a major financial hurdle for many Americans to overcome. The single biggest mistake couples make is they do not sit down together and do any financial planning before getting married,” said Joe Buhrmann, COUNTRY Financial Manager of Financial Security Field Support. “Once couples start getting serious, they should learn as much as they can about their combined financial situation. If they need more help, they should reach out to a financial advisor who can get them on the right track. It’s important, not just for their love life, but also for their financial security.”

Developing a plan early on can help prevent future marital problems and conflicts. Having the talks and reaching agreements before walking down the aisle could even save engaged couples money in the long run. They will have a better idea of where they stand moneywise and what types of insurance coverage they will need and can afford. Taking on these early insights could also get them started on savings for retirement and building their joint financial security before they even tie the knot.

At minimum, couples should develop a basic plan that addresses:

  • Spending: How much money will you make combined? Will you rent or buy and how much can you afford to spend monthly on housing? What about food, clothing and utilities? After that, determine how much discretionary spending you each can do.
  • Insurance: Consider what coverage you will need and how much you might pay in insurance premiums.
  • Debt: Ask yourselves how much combined debt you will have. You’re marrying the love of your life, which also includes their outstanding debt and credit score.
  • Saving: How much money will you save and how frequently will you save it? What items will you save for? (i.e. a down payment towards a major purchase, vacation, your first child, etc.)
  • Retirement: Determine how much money would  you need to accumulate to live comfortably in your golden years. Will you need to work? What might you get in Social Security benefits?

“Out of all of these topics, insurance is by far the most overlooked part of pre-marriage planning. Younger couples tend to believe they are invincible and have the rest of their lives to save and prepare for retirement,” Buhrmann said. “Couples need to sit with their financial representative and look at their entire financial house, not just their retirement and investments. The foundation of any solid plan is insurance because it protects the assets you accumulate – your home, vehicles, savings – and your income through disability and life insurance.”

Couples can have differing views on monthly spending and saving, but asking and answering these questions early on and forming a budget can help them keep their spending under control and their financial future on track.