By Jarrad Brown
First, congratulations on taking the step to spending the rest of your lives together. Now that you're engaged, chances are you or your fiancé is now considering venues, dates, the guest list, entertainment, colours and all of the other decisions when it comes to planning for your special day. To truly ensure that you have a long and happy life together, it's important to take some time to discuss money.
Many newly engaged couples make the mistake of avoiding discussions about money because they're concerned about starting conflicts during what should be a happy and joyous time of their lives. We all recognise however, that money is one of the largest sources of marital conflict. Consider the following six tips if you're recently engaged:
1. Insure Your Engagement Ring
It's important to recognise that your new engagement ring is an asset and should be insured as such. The average ring costs over $5,500 so it's important that it be included in your insurance. While you might have to pay for the appraisal, it's an important step in recognising the value of this symbol of love.
2. Set up a Wedding Savings Plan
If you haven't already set up an investment vehicle to save for your wedding, it can be a good idea to start as soon as possible. You should also consider how you'll continue to save to meet your other financial goals such as retirement or future children. If you do already have a savings vehicle in place, consider allocating a portion of it or simply increasing your savings to cover your wedding expenses.
3. Be Honest About Your Finances
You've just agreed to tie the knot, now is certainly not the time to be dishonest with your significant other about your personal finances. Lies about money can tear apart most relationships and cause conflicts in future, so it's important to be open and honest from the start. Discuss your income, savings, any debts that you may have and any assets that you may have built up.
It's also important that you don't attempt to demand complete transparency from your partner, but simply be open and honest about your own finances. They will quickly recognise the effort that you're putting in and in time (if not immediately) will start to open up about their own finances.
4. Discuss What Money Means
For many households, money can be a taboo subject and is rarely discussed. It's important that you quickly escape this mind set and start discussing finances with your significant other. Discuss how you'll share expenses, and how you'll save, what your joint and individual financial goals are, who'll take care of the bills, how you'll track your progress. It can be a worthwhile idea to bring in an Adviser for this discussion to start setting some framework around the discussion, particularly if it's not a process that you're familiar with.
5. Will You Merge Your Assets
When it comes to joint finances, many people have different views, and with the exception of ensuring that you are open and honest with your partner, there is no one-size fits all approach. For many people, the decision of whether or not to merge their personal finances will be dependent on what their parents did. Therefore, many can make the mistake of making an assumption that their partner feels exactly the same way that they do about their household's finances.
It's important that you discuss whether you'll merge your current finances or decide to keep some separate. If you do decide to merge your assets and save into joint accounts, it can be a worthwhile strategy to set a small amount aside on a regular basis into your own individual account. This allows you to make small purchases that you can decide on independently.
6. Review Your Credit Scores
It's a good idea to review each others current credit scores as if/when you start applying for loans together, this will impact each of your credit scores. If your fiancé's credit score is less than ideal, start to formulate a plan for how it can be improved and ensure that it doesn't impact on you negatively.
As you're planning for your special day together, be sure to take the time to plan your financial future together also. Be open, honest and discuss your finances regularly to set the foundations for a long and happy life together.