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Jordan Goodman is the author of Everyone's Money Book, available at 888-201-6300. This is the third edition of the book. You can also visit his Web site at www.moneyanswers.com. He talks with us on Thursday mornings.
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May 29, 2003
"Financial Preparation for Marriage"
'Tis the season for weddings and honeymoons. While that is all romantic,
it is also an important time for both bride and groom to talk over their
financial situations before they say “I do.” Many times, people who
fall head over heels in love forget to ask some simple, completely
unromantic questions of their potential spouse, such as:
- How much debt do you have? Have you defaulted on your student loans?
- Do you like to save and invest? And, are you aggressive or conservative in
your investing style?
- What kind of health insurance are you offered at work?
While it may destroy your courting if you bring these ugly practicalities up
on a date, you should know who you are getting involved with, financially
speaking, before you tie the knot forever. Here then, are a few topics you
should discuss long before the marriage:
- Investments: Do you have a portfolio? What kinds of stocks, bonds and
mutual funds are in it? What investment style, if any, do you have? Do you
save and invest regularly, or only occasionally if you get a windfall?
- Debts: What kind of debt do you have? List credit cards, student loans,
car loans, mortgages, and debts to friends and relatives. This is the area
that most people don’t want to talk about -- and then the spouse finds out
about them later and usually is not too happy about it.
- Spending: What is your spending style? Are you frugal or a wild spender?
Some of this you can observe, but you really don’t know everything until you
ask and see how they spend over a longer period of time. You are going to
have to agree to a budget and it is good to know that you are compatible in
your spending habits.
- Children: What is your attitude about raising kids? Do you think both
parents should work and leave the kid in daycare, or is it important that one
of you stay home to rise the kid, thereby cutting your income?
- Insurance: Do you have life, medical, auto and disability insurance?
This clearly is about the most nonromantic area you can possibly talk
about, but it is important to make sure you are well covered against all
contingencies.
Most importantly, you have to learn to communicate about your personal
finances starting from early on. About half of divorces are caused by
miscommunication over finances, so the costs of not communicating well are
quite high. If you discuss financial priorities, goals and how to share
financial responsibilities, you can live in financial bliss forever!
For More Financial Tips From Jordan Goodman
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