So, you’ve decided to take the next step in your relationship? Congratulations! More than 2 million people get married every year in the United States. Before you and your fiancée take that final step, you’ll want to make sure your life together begins on financially stable ground. Some researchers estimate that almost half of all marriages in the United States will end in divorce or permanent separation, and one of the causes of strife between couples is money. Ensuring financial stability now will likely prevent arguments about money in the future.
Talk About Money
Depending on how well you know your future spouse, you may already have had the “money talk,” particularly if you already live together. If this isn’t the case, you and your fiancée need to have a strategic talk about your finances. Here are a few questions you might want to ask each other:
- How much do you make now, and will your income increase or decrease in the next 5 years?
- Where do you earn most of your money (full-time job, freelance work, property, etc.)?
- How financially stable are you right now?
- Do you want to combine incomes when we marry, or do you want to keep separate accounts?
- Do you have a budget? If not, can we make one together?
- Do you find it hard to save money?
- Are you okay with me making more/less/the same amount as you?
- What should be our financial goal for the next 5–10 years?
- Who should be in charge of which bills?
Be aware of how your future spouse is likely to save or spend money, which financial institutions he or she uses, and where you both keep your important financial information and documents.
Create an Emergency Savings Fund
In the event of a disaster, you both want to be prepared. To give yourself a significant financial safety net, both of you should save enough money to cover living expenses for at least six months. Store this fund in a savings account or a money market fund.
Get Insurance
Two types of insurance you might both need to get are disability and life insurance. Unless you’re extremely careful savers and can store up a significant emergency savings fund, you should both get disability insurance to cover the cost of living if one of you becomes disabled and is unable to work for an extended period. While your emergency savings fund should cover the cost of a short-term period, long-term illness or disability is expensive and should be covered by a good disability insurance policy. Upon your injury or illness, the policy will pay a percentage of your average income until you can work again.
A good life insurance policy will also protect your loved one in the event of your death. No one likes to think about end-of-life scenarios, but tragic accidents occur on a regular basis. If you pass away, your spouse might be left in financial difficulty. Where two people produced two incomes for one life, only one person will be contributing after the other’s death. A mortgage, for example, easily covered by both your incomes could become unaffordable for the remaining spouse. A life insurance policy will cover you as long as you pay the premium each month, which can be relatively inexpensive.
Take the time to evaluate both of your financial situations and how you can create the best possible life together, starting with a stable monetary basis. If you would like to discuss some options, contact one of our Atlanta insurance administrators at (888) 451-0883 or fill out our online form.