When couples decide they want to get married, often one topic of
discussion is finances. How will the wedding be paid for? How will
the honeymoon be paid for? Who will pay for what? After the
honeymoon is over, many couples realize that they failed to discuss
many other important financial details.
By Eric Heckman
When couples decide they want to get married, often one topic of discussion is finances. How will the wedding be paid for? How will the honeymoon be paid for? Who will pay for what? After the honeymoon is over, many couples realize that they failed to discuss many other important financial details.
It’s hard to think about what you would do if something happened to you or your spouse, or worse, both. What’s even scarier is what could happen if you don’t discuss your finances while you’re together. The harsh reality is every marriage eventually ends in divorce or death.
You and your spouse should be able to answer these 10 questions about your finances. If there are questions you can’t answer, take the time to sit down as a couple and figure out where you stand.
1. How much do you have coming in and going out? The story for many couples is that more money is going out than coming in, but the first step to overcoming overspending is to recognize it.
2. Do you have a set budget? After you realize exactly how much is coming in and going out, create a budget. Start by listing all the fixed expenses you have, like your mortgage, car payments, credit card bills, utilities, etc. After you deduct all the fixed expenses from your income, take a hard look at what’s left. You should not be spending more than this on unfixed expenses, like entertainment, shopping, vacations, etc.
3. Where do you rank on the credit scale? Your credit history is one of the most important aspects of your finances. There are three primary credit-reporting agencies: Equifax, Experian and TransUnion. You should regularly request a copy of your credit report to see where you stand and make sure you haven’t become a victim of identity fraud.
4. What assets do you own? If your car is only half paid off, you do not fully own it. Don’t forget about long-lost investments you might have made before you were married. Keep all documents together in a file.
5. How much debt do you have? At least once a year you should assess how much you owe to creditors. Are you leaving your loved ones with enough to cover your expenses or a huge financial headache?
6. What future expenses do you face? Make two separate lists of needs and wants with estimated costs. Now look at your budget and this list of possible future expenses and try to determine how much you can afford without going into future debt.
7. Whose name is on what? Review all of the assets you own and do a status check on all that require a beneficiary, such as life insurance policies, pensions and other retirement savings. If an ex-spouse is still listed, they will receive the benefits even if you are remarried.
8. Do you have a will and/or power of attorney documents? If you have small children, you should have a guardian and trustee named for them as well. You should also look into establishing powers of attorney for healthcare and finances. A living will is necessary to ensure that your family and doctors know your wishes should you become incapacitated.
9. Where are all financial documents kept? Being able to find these critical documents quickly can make difficult times a bit easier. Of course your spouse should know where these documents are kept, but it’s also a good idea to let children or other family know as well.
10. Who are your financial advisors? Trusted advisors who are familiar with your finances can steer you through difficult times. Make sure he or she is one that makes an effort to contact you on a regular basis.
These questions cover topics that are not easy to discuss. Making an appointment with a financial advisor might help you and your spouse discuss these topics. The topics that are the least fun to discuss are often the most necessary.
Eric Heckman is president of Heckman Financial & Ins. Services, Inc. Eric has over 13 years of experience to the field of financial planning. You can contact Eric at www.WealthCreator.com or 297-9800.
