Though we hate to admit it, engagement photo shoots, florist meetings and venue visits aren’t the only things that should be on your pre-wedding to-do list. Your combined financial health, including credit scores, debt payments, and savings are an important part of any pre-wedding conversations… Especially if you are considering purchasing your first homes as a married couple. An average Millennial’s student loan debt is said be about $29,400, according to the Institute for College Access and Success – and that number can heavily impact how and when you join finances, apply for a mortgage, and much more. To prepare you and your partner, I’ve provided five steps you can take to begin considering these more mundane aspects of marriage.
First, it’s time to talk about money. This may seem obvious or silly, but it’s a very difficult topic for most couples to initiate. Talk about it, discuss your priorities, and examine how you both spend money. Are you looking to buy a home in the next five years? Are you planning to save for a six-month travel adventure instead? Make sure you’re on the same page, and if you’re not, try to find some common ground from which you can move forward.
Next – and this is particularly important if your goal is to save up for a down payment – check your credit reports. If you want to apply for a mortgage, you’ll need to build up a good credit score, so why not start now? If you take a look and all is well, great. But if not, do your research into why. Like all humans, we make mistakes, and credit scores may contain errors. If the poor score is not the fault of errors, but rather of delayed payments, then begin working to repair that. You can set up payment reminders and, along with your wedding planning appointments, schedule your credit card payments in advance. You can also work to improve your score by paying off your debt. Come up with a payment plan, and begin working to pay what is on your credit card without adding more to it. Although its easier said than done, the use of credit cards should be limited after payments have been made.
Once you’ve started working through credit scores and credit card debt, sit down with your partner and talk about where you both are with student loans and other forms of debt. Yes, it’s awkward, scary and sometimes embarrassing, but you simply can’t begin to work through early financial challenges until you’ve put them all out in the open! Look at your debts, and look at your salaries. Create a plan with both in mind, and be realistic. Is there a daily Starbucks run that you can cut out? Yes. Can you live on $50 a week for the next year? Probably not.
Then, begin to examine different solutions; there are many ways to work through debt. Depending on the amounts owed, you might consider a debt consolidation loan or look into refinancing your student loans. If you have somewhat reasonable amounts, begin working through the highest-rate obligation first. However, it your debt is a bit more daunting, start with the smallest debt first as it will give you a sense of accomplishment that will help you tackle the large stuff.
Finally, start saving. Look at your finances as a team, and decide how you can cut down, and where you can save. Can you get rid of someone’s Netflix account? Can you spend date nights cooking cozy meals at home instead of going out? Maybe you can live in a slightly less expensive apartment, or rent out one of your bedrooms for a few months. Set goals, and stick to them. Even better: set up an automatic payment to your savings account each month, and don’t think about it. Over time, you’ll accumulate the amount you need to continue moving forward!
Newlywed life is exciting, but it does have its challenges. Don’t let finances get the best of you in the first couple of years. Have the conversation early, and find trusted advisors to help you with the things you can’t quite manage. It’s not embarrassing or scary if you plan ahead!