Today’s post is by Kelsey Yeager from On My Way to Happiness. Kelsey is the founder and CEO of On My Way to Happiness, a blog where millennials talk about money in an easy and fun way. She paid off $30,000 of debt in 1.5 years and the last $20,000 in 6 months off of her entry-level salary!
I recently got engaged, about 4 weeks ago…woohoo!! And while most freshly engaged women immediately begin planning their wedding, I just can’t stop thinking about what married means: combined finances.
I haven’t looked at any venues online. I have no clue what kind of dress or wedding I want. But I do know exactly what I want to do with my money before the big day!
Luckily, my fiance is very similar to me when it comes to money. We both learn from each other, and we are both naturally “savers”. Neither of us spends tons, we put a lot into our 401ks, and we are open about sharing our finances with each other. We knew early on how much each other made, and he was 100% supportive the entire time I was paying off debt.
Even though we’re both mostly on the same page, we have still been budgeting as separate people this whole time. I know he spends WAY more on beer than I ever would, and I will randomly drop hundreds (or if I’m being honest, thousands) on my business. We still have very personal expenses in addition to combining finances – and therefore we still have a lot to discuss.
Below are 12 money moves I want to make before I get married.
1. Start A Honeymoon Savings Account
We don’t know when our wedding will be, let alone when or where our honeymoon will be. But what I do know is this: I want a bomb ass honeymoon. I want it to be the relaxing getaway of a lifetime where we spare no expense!
Last year, I went backpacking around Europe where we stayed in hostels and ate mostly cheap meals to save up. It was tons of fun and I loved the experience, but I don’t want “money” to be such a concern on my honeymoon…ya know? I don’t want a hostel, I want a 5-star hotel! I know I probably am coming across a little bit diva-ish here, but I feel like a honeymoon is the best excuse for a long, fancy vacation than ever. I would happily skip wedding expenses for the honeymoon.
Right now, we are thinking about getting married in about a year and a half – at the soonest. In 18 months, that is 39 paychecks from two people (78 total). If we both put in $100 per paycheck now, it will end up being $7,800. This doesn’t include any money from the wedding to spend! That’s a fancy vacation to me!
Even though we don’t really have solid plans, this is exactly why I want to start this account as soon as possible. A simple $100 per paycheck is money we won’t really miss now, but it will add up to a lot when we actually need to spend it!
2. Start a Wedding Savings Account
We want to save money for our wedding as well. We may receive money from our families, but I don’t want to rely on that. What if we decide we want a splurge purchase that is out of their budget, or they had never planned to give us any money at all?
The way I see it is that I’m the one that chose to get married, and therefore I’m the one that should pay for it. I would feel way too guilty knowing I’m having a giant, extravagant wedding at the hands of my parents anyway. I want to know whatever wedding I choose is one I can personally afford at the moment and not have to finance.
Also even if our families did end up giving large amounts of money, then we could just use up the money we have saved towards the honeymoon, or something extra for the wedding, or throw it towards investments. It’s never a bad idea to have savings goals because at the end of the day it’s just a giant chunk of money that you have instead of spent!
3. Start a Combined Bills Checking Account
Since we live together, we have a lot of shared bills already. A lot of the hard stuff has been talked about – how much do we each contribute to rent? How much do we pay for food? Do we split stuff down the middle or have a different system?
Now that we’re engaged, however, we are creating a combined account to which we’ll both contribute money every single month. The money we input will cover all of our shared expenses, and none of our single person expenses. We have our house, utilities, food on there – as well as fun things that we do together such as going out to eat and entertainment. We will not include personal car payments or anything like that during the engagement period.
Note: to find the accounts to open, we are looking for banks that offer bonuses. Many banks offer a bonus $300 or so if you put in a certain amount of money in a specific time period. We are choosing this method for our bills because since money will constantly be put in and out, we won’t ever accrue significant interest. We also won’t accrue significant interest in our wedding or honeymoon accounts, since we will only save up a few thousand and then cancel the account in about two years. A $300 bonus is more than we would make in interest during that time period, so this is a more effective method for us.
4. Pay Off All Debts
Luckily, I don’t have any debts right now. But if I did, I would definitely want to pay them off before I got married.
Note here: if you’re not even CLOSE to getting married, I still highly suggest paying off debt now. As soon as possible. For reasons completely unrelated to marriage. That being said, I can’t imagine having student loan payments or credit card debt during this time. I already feel like I have to work really hard to save for this wedding, and if I knew hundreds were going to the government instead of me on my day, I know I would be pissed.
I also would feel guilty to have my husband have to take on my debt. When you get married, even if you practice your finances separately, legally all money is both of yours. I would feel bad knowing a portion of our joint income would have to go to my student loans.
My fiance does have debt, but he only has a mortgage which makes sense for me to take on because I live in the house, haha. I went house hunting with him and we chose this house together. However, I don’t know how I would feel if he had tens of thousands of student loan debt. Obviously, I would help out any way possible and love him just as much, but it may feel different starting off a marriage in the hole with debt that I didn’t accrue. It would be unfair if I made him pay off my debts, too.
5. Max Out My 401k
Before we fully combine finances, I would really like to max out my 401k. Right now I am contributing about $15,000 and I would like to reach the full $18,500 by the time we get married. This is so that both of us can max out our tax-advantaged accounts, and set ourselves up for retirement success. A couple using two separate tax-advantaged accounts is the smartest way to earn money long term.
I don’t fully max it out right now for two reasons. First of all, I *probably* could live off the amount I take home (and don’t put in other savings) but I am worried I cannot. Any “extra” money I have leftover at the end of the year in my buffer will go into my Roth IRA. Second of all, I am saving heavily for the wedding! I don’t want to stretch myself thin maxing out my 401k and not be able to afford the wedding and honeymoon. I am still putting a high amount in, so I don’t feel bad putting the extra $3,500 ($135 per paycheck) into savings for a year or two.
6. Create A Budget With My Fiance
Check! We already created our first budget together 🙂 We discussed all of our bills, goals and wants and determined how much each of us should contribute to what. We mostly decided to split everything down the middle, except he will pay slightly more for the mortgage since it still is his house before we actually get married.
This was easy because we are both on the same page and make similar salaries, however, it still felt weird to suggest he pay more for something or I pay less. The first semi-budget we ever made together, when we moved in together, definitely had some tears. We had the same end goals – but money is such a sensitive topic it’s hard not to get emotional about certain concepts.
Now that we’ve been living together and sharing bills, it made making an “official” budget easier because we were really familiar with everything we were covering. I highly suggest at least start being open with your partner about money as soon as possible, to make combining money talks as least painful as possible.
7. Have Consistent Budget Meetings (Even Just to Check-in)
Although we created a budget together, what’s the point of creating one if you’re both not going to stick to it? I’m pretty diligent about tracking my personal spending and budget now, and I know I’ll be doing the same with our joint account. But I’m not a police officer or teacher making sure a kid did their homework every day. I’m ½ of a partnership and if he or I am not following the budget, it’s not lecturing time. It’s let’s work together to determine what the problem is time.
It’s important to keep bringing up our budget to inspire both of us to keep following it. Instead of a giant restrictor, I view our budget as a tool to help us reach our goals. Continuously discussing our budget, even casually, always will help keep our ultimate goals in mind.
8. Talk About Long Term and Get on the Same Page
Dave Ramsey with Ramsey Solutions conducted a money study of over 1,000 couples over money and marriage happiness. They found that 94% of couples that say they have a “great” marriage discuss their money dreams with their spouse extremely frequently, compared to only 45% of couples who say their relationship is “okay” or “needs improvement”.
That’s huge! I want to make sure money, and our future goals together, are always open and out there with each other. I want us to always be on the same page. If we want to live different lifestyles or make different purchases, it’s important to talk about it and make a compromise.
9. Begin a House Savings Fund
We live in a house together right now that we absolutely love. We have a huge master bedroom, a garage, a finished basement and a nature bike path in our backyard. There’s not one thing I want to change about our house.
The only problem is that the master bedroom is so big because there are no other upstairs bedrooms in the house, just one downstairs. If we ever had kids and wanted or bedrooms, we would really have to move.
I have no inkling of moving now, but if we ever decide to, I want to make sure I have the money on hand to do so. Just like buying a house at any time, you can’t wait until the second you want a house to buy one. Unless you casually have $50,000 minimum on hand to just spend on a down payment on a whim, you’re going to have to start saving early. Think of it this way: if you decide you need to have $50,000 in 6 months from now, you will need to save $8,333 per month. Yeah, I don’t have that kind of money either!
If you need $50,000 in 1 year, you will need to save $4,167 per month. I still don’t have that kind of money!
If you need $50,000 in 10 years, you will need to save $417 per month. This is still kind of a lot to be saving 10 years in advance!! This is EXACTLY why I want to start saving now. I have no idea if we will want a house in 10 years, but I want to start saving now just in case!
10. Open Credit Cards to Buy Expensive Things and Maximize Rewards Points
Yes we want to open checking accounts, but we also want to open credit cards to go with these accounts. There are many cards with really strong travel rewards programs. Many of them require you to spend a certain amount of money in a certain time frame to get a large chunk of points that translate to free miles, hotel nights, or cash back.
Since we will be putting large amounts of money down such as wedding bands, venue, dress, etc. it just makes sense to open a new card and get bonus rewards with it!
Ideally, we want to hack our honeymoon and get all flights and hotels completely free!
Obviously, we will pay each card back in full every month and not use them to buy anything we can’t afford.
11. Sign a Prenup, Or Not
I did a lot of reading on a prenup before I was even close to getting engaged because the concept intrigues me.
You hear a bunch of horror stories and my whole life I always thought I would probably sign a prenup, but now that we’re here, I’m kind of leaning towards no.
Just like how starting off a marriage in debt could possibly set the tone for negativity, I think a prenup may have the same effect. Sure, you’re sharing your lives together…conditionally. But if one party is really adamant about that it kind of sets the tone that you want your assets to yourself and aren’t really all about fully sharing your lives.
Also, one example: let’s say a man protects his salary from his wife in case of divorce in the prenup. They are married 20 years, raise beautiful children, and then decide to get divorced. The woman was a stay at home mom who contributed to the marriage through her time and nurturing to the children. She sacrificed her career and financial earning potential to the marriage, yet at the end of the day, the male gets his salary and the woman has to start from scratch. It’s not really fair that the male is able to earn the same high salary, when the woman is now broke, even though they both contributed equally to the marriage in different ways.
I completely love that prenups exist, and they are very necessfory in some situations. However, neither my fiance or I really have many assets (he has his house) or crazy millions in the bank.
I don’t think we will sign one, but it needs to be a conscious, intentional decision the couple makes together.
12. Air out *All* of Our Dirty Laundry
I know there’s nothing that I’m hiding, and I’m 99% sure there’s nothing my fiance is hiding. However, engagement is the time to extract out all of the financial secrets, haha! A study by CreditCard.com shows one in five people have hidden a financial purchase from their partner. One in five! Before committing to another person 100%, I want to make sure I know every single thing about him – good or bad.
Engagement is an exciting period, make sure to enjoy it!
I am loving being engaged and I’m excited by all the possibilities money wise! I see a combined budget as a new, fun challenge together. I love everything spreadsheets and money so this is legit fun for me.
However, I know other people don’t find joy, and I totally understand this can be super stressful too. My advice is to begin talking with your partner about money as soon as possible. It doesn’t have to be a lecture, or an interview, or an interrogation. Just start sharing everything you’re thinking about your own accounts at first, and open up the dialogue in a normal way!
What money moves would you make before marriage?
Want to follow another millennial’s financial journey and figure everything out together? Catch Kelsey from On My Way to Happiness on Facebook or where she is most active Instagram!