Planning for a secure married life
QUESTION: I am planning to get married soon and my fiancée and I are keen to start off on a sound financial footing. A major decision we have to make now is the size of our wedding. We would really like to accommodate our many relatives and friends, but are concerned about the cost. We do not want to make a wrong step, particularly with our finances, and so soon in our life together. How do you suggest we go about laying a solid foundation?
PFA: Financial stress is the cause of many broken marriages. Your wedding should not be the first source of any financial stress in your marriage. Planning your wedding is an important first step for both of you in planning your financial affairs.
I recall reading about the experience of a British couple, not too long ago. The young gentleman, wanting to make his lovely lady happy, borrowed heavily so they could have a grand wedding. Some time after the wedding, the young bride learned for the first time that they were in deep debt. She was not prepared for this and walked out of the marriage.
A wedding can be very expensive. Consider the cost of the reception (especially the food), dress, invitations, ring(s), photographs, videotaping, and transportation, just to name some of the expenses. And you may want a honeymoon too. Remember also, the costs members of your bridal party will incur.
After the wedding, you must go home - to your home. It will likely cost you a tidy bit to set up, particularly if you are moving from your parents' home or your bachelor's pad. To be fair though, this phase may work out cheaper for two persons who had their own individual-rented accommodation.
You need a wedding budget. I suggest you do not spend more than you have and if you have parents who are able and willing to help, do not plan to spend more than they have or are willing to make available to you. Where it is feasible to rent, rent instead of buying. If you are able to save this early, you may be able to save your marriage for all times.
If you choose to use a bridal registry, select items that are useful to you, but be reasonable to your guests. Times are hard. Select a registry with a wide range of items and a wide range of prices. If you manage this wisely, you may save handsomely on the cost of setting up your home.
As a small group of friends assisted two members of their circle to get things together for their wedding, one member, observing that many of the invitations were destined for persons living abroad, curiously asked if those persons would be attending the wedding.
The bride-to-be responded, "If I can't get their presence, I will get their presents."
If you see your wedding as an investment, you may be setting up yourself for a big disappointment.
But there are other issues to address. Determine, if you have not already done so, your spouse's attitude to money.
If you have different attitudes, one is a spender, the other a saver, for example, you need to do some reconciliation recognising that none of us can change another person.
Have you learned to trust each other in financial matters? Do you know each other's income and financial priorities? What is your attitude to having joint bank accounts and investments? Is either of you going into the marriage with debt? If so, what is the nature of the debt and how much is it? Will both of you assume responsibility for servicing it?
Different people have different approaches to financial matters, like any other matter. Upbringing has a very strong influence on attitudes and behaviour. In light of this, there is no one right way to address some of the issues you will face. It is important that the course you take is agreed by both of you and that you both are comfortable with it.
Set the ground rules on how to handle your differences early and have a joint decision-making process. Craft the family budget jointly, but determine who the financial manager is.
If your wife-to-be is better at financial management than you, do not feel that you are not a real man if she takes the lead in managing the family finances.
If you choose not to merge all financial responsibilities, determine who is responsible for what, but the financial manager should ensure that all commitments are honoured. Ensure that an emergency fund is in place at the outset, and agree on how your marriage will affect previous financial arrangements, in respect of insurance beneficiaries, for example.
Be honest with yourself and each other from the outset. Set joint goals, be realistic in your expectations, and allow time to work for you.
Oran A. Hall is principal author of 'The Handbook of Personal Financial Planning'. For free money management advice, email: firstname.lastname@example.org