Pre-wedding due diligence: a must!

Before you co-habitate, do your financial due diligence! It is not exactly the most romantic thing to do (sweetypie,  how big is your credit card bill) but extremely necessary to avoid/minimize pesky arguments in the future.  TheStreet.com‘s Michael Katz has come up with the following tips.

1.  Discuss Financial Goals and Attitudes
You HAVE to talk about money and what it means to you before it gets to you.  Differences in attitude can be a major source of tension.  What will you use the savings for?  A new car?  Travel?  House?

2.  Review your Credit History and Debt
Credit card debt is a touchy subject.  Do I want my husband to know that I blew half of my salary on shoes?  One of the reasons why the  Shopaholic series is so popular is because so many women can identify with Becky Bloomwood.  Both partners need to figure out how to reconcile their spending habits.  It takes a little bit a work but the spendshift and the saver can get along.  The family finances are your joint responsibility.  Remember, the rules on conjugal property apply to both assets and liabilities.

3.  Update Beneficiaries, Will and Legal Documents
Remember the insurance policy you took out when you were still single?  It’s time to revisit and update the beneficiaries.  A tad morbid perhaps,  but you should also make a will, power of attorney and health care proxy so that your families aren’t left with difficult decisions to make.

4.  Create a budget
Your financial goals will not come to fruition without a good budget. It will let you know if you are living beyond your means.  Oh, and make sure that you have an emergency fund (generally 3-6 months worth)

5.  Joint or separate accounts?
What’s yours is yours? Or what’s yours is ours?  There are pros and cons to either arrangement.  Given our very different personalities and preferences,  we decided to set up a common fund to take care of the family expenses and investments and at the same time maintain separate chequeing accounts for our personal expenses.   So far so good.

Real Simple has an excellent list of Money Questions to Ask.  Download the file here.

Related topics:
Engaged? Show me the money!

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Motherhood has a very humanizing effect. Everything gets reduced to essentials. ~Meryl Streep

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Engaged? Show me the money.

Family finances can be a tricky subject.  The engagement period is an excellent opportunity to communicate…. communicate… communicate… so that hopefully, a few years down the road,  you won’t be screaming at each other to “show me the money”.

Most couples, once engaged, attend a Discovery Weekend to thresh out potential points of conflict e.g.  how many kids they intend to have,  how they will be raised,  where they will spend Chrismas Day, etc.   I firmly believe that pre-marriage counselling should also include financial planning.  I had an officemate who, upon her engagement, sat down with her fiancé to determine their networth and make a 5-year financial plan.  It’s a great idea which I think I will ask my children to do when it is their turn to settle down and start a family.  

These are conversations which SHOULD take place BEFORE the wedding – doing an ostrich could lead to frustration, fights and power struggles.  Here is a list of questions which all newlyweds should ask themselves and their partners.

1.  What are your assets and liabilities?  In our culture, talking about one’s financial status is generally a taboo subject, but these are important numbers to know.  You need to know if you will be starting your married life in relative financial security or deep in debt.  You cannot stay in denial about the state of your finances, especially when it comes to debt.   The truth will always come out and sometimes it won’t be a pretty sight.  

2.  What is your money history?  Another taboo subject but also necessary.  You need to discuss how you were raised to view money.  How did you become a spender or a saver?  What does money mean to you?  You need to understand each others money habits before determining your future financial goals.

3.  What are your financial goals?  That dream house, European vacation, BMW all come with a pretty hefty price tag.  You should talk about the time-bound steps you’ll be taking to transform those dreams into reality.   Turn this into a yearly exercise. 

4.  How will we manage our finances?  The wedding preparations can be viewed as a stress test which will help you identify “hot spots” which may need to be worked on together.   How do you deal with run-away wedding expenses?  Does your partner get easily blindsided by the pretty flowers and fully beaded gown? 

These questions are meant to be starters to a more meaningful and insightful conversation.  You will certainly learn more about each other in the process.  We’re starting  a bit late but hey, better late than never.  =)

Related Post:
Pre-wedding Due Diligence: A Must!

=======================================
Motherhood has a very humanizing effect. Everything gets reduced to essentials. ~Meryl Streep

Subscribe to my feed or subscribe via email to get notified of my next post.

Questions Couples Should Ask (Or Wish They Had) Before Marrying

A little less than one month to go before Valentine’s Day and the advertising frenzy is starting to ramp up. I’m all for the celebration of love but also advocate the use of reason, particularly when it comes to marriage. Marriage is not built on surprises. There was a great article written last month in the New York Times which listed a series of questions all couple should ask themselves before marrying:

1) Have we discussed whether or not to have children, and if the answer is yes, who is going to be the primary care giver?

2) Do we have a clear idea of each other’s financial obligations and goals, and do our ideas about spending and saving mesh?

3) Have we discussed our expectations for how the household will be maintained, and are we in agreement on who will manage the chores?

4) Have we fully disclosed our health histories, both physical and mental?

5) Is my partner affectionate to the degree that I expect?

6) Can we comfortably and openly discuss our sexual needs, preferences and fears?

7) Will there be a television in the bedroom?

8) Do we truly listen to each other and fairly consider one another’s ideas and complaints?

9) Have we reached a clear understanding of each other’s spiritual beliefs and needs, and have we discussed when and how our children will be exposed to religious/moral education?

10) Do we like and respect each other’s friends?

11) Do we value and respect each other’s parents, and is either of us concerned about whether the parents will interfere with the relationship?

12) What does my family do that annoys you?

13) Are there some things that you and I are NOT prepared to give up in the marriage?

14) If one of us were to be offered a career opportunity in a location far from the other’s family, are we prepared to move?

15) Does each of us feel fully confident in the other’s commitment to the marriage and believe that the bond can survive whatever challenges we may face?

51% of Women Are Now Living Without Spouse….

… according to a New York Times analysis of census results. Several factor were seen driving the statistical shift. “At one end of the age spectrum, women are marrying later or living with unmarried partners more often and for longer periods. At the other end, women are living longer as widows and, after a divorce, are more likely than men to delay remarriage, sometimes delighting in their newfound freedom.”

What I found particularly interesting was that according to the Census report, only about 30 percent of black women are living with a spouse, compared with about 49 percent of Hispanic women, 55 percent of non-Hispanic white women and more than 60 percent of Asian women.What does that say about Asian women?

Are we nearing the tipping point?