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Making the decision to get married begins a new and exciting adventure in your life as a couple. Love and excitement permeate the air as you start planning the perfect day. Although the decisions surrounding a wedding seem endless, such as setting a date or picking the perfect venue, there are other important questions that need to be answered as you start your lives together.
Should two people manage the money?
The short answer is yes! Allowing only one person to be in control of the household finances can lead to potential disaster. You and your soon-to-be spouse should take an evening and sit down to discuss who is going to manage which aspects of the household funds. Be sure to honestly answer the “who, what, when, where and why” when it comes to both of your finances.
Now is the perfect time to come clean about everything you have whether it be the amount of debt or the bonus you received last week. Take out your last bank statements and review what you have and what you owe.
How will you handle the expenses?
There are a few different approaches to how you can split the expenses as a couple. One option is that you can split the expenses 50/50 (which means splitting everything equally). This works the best if both partners make approximately the same amount of money.
Another option is that you can split everything proportionately. For example, if one person makes $60,000 per year and the other makes only $30,000 annually, then the person with the higher income could pay 60% of the expenses and the person with the lower income would be responsible for the remaining 40% of the expenses. For this approach to work, each partner should prepare a personal budget to ensure that the expenses breakdown is realistic.
The last option is to pool all your money together, then set your financial goals. When using this approach, it is highly suggested to set aside a budgeted amount so each partner can have personal indulgences. Overall, this is a great strategy to ensure you are working together towards a goal while avoiding resentment.
How much personal spending money does each of you need?
The truth is each spouse needs their own personal spending budget. By setting aside a personal amount that will be outside of your household budget, you avoid the resentment that will come if you need to ask your partner for money each time you want to purchase that $10 t-shirt or buy that morning coffee. Together decide on an amount that is fair and work it into your budget.
You should also decide how much can be spent before you need consent from the other person. If one of you is a shop-a-holic, make the number low. If one of you is extremely frugal, negotiate a higher number. Doing this will not only eliminate the need to hide things from your partner, but it will also help to limit impulse purchases which can easily push your budget off-track.
How will you cope when things get difficult?
Are you prepared for the ups and downs that life will throw you? As much as you probably don’t want to think about worst case scenarios, make it a point to discuss what you would do if life throws you a lemon. Do you have a will, life insurance, disability and critical illness insurance, emergency savings, and so on? By having this conversation now, you will both be prepared for the potentially awful circumstances that life may throw at you in the future.
Check out our sample wedding budget here: MoneySmart Wedding Budget