create financial plan

You're Engaged, Create a Financial Plan

It’s no secret that financial issues can place a severe strain on a marriage. Despite the fact that disagreements over the use of financial resources can stem from an underlying conflict of values within the couple, the cause of the argument is usually blamed on money. Studies have shown that financial issues and lack of preparation are two of the most common causes of divorce in the United States. With that said, I’m going to proclaim that a financial plan can help strengthen a marriage even before the couple walks down the aisle.

The financial planning process includes the exploration of shared values, goals and objectives. A couple’s understanding of these individual characteristics are critical when planning to share the rest of their lives with someone else. Making the decision to create a financial plan before you get married is an excellent way to prepare for the future, both mentally and financially.

Getting Started with Your Plan

Sitting down with your future spouse to develop a list of goals and objects can be perceived as a less than romantic endeavor. While I agree that conducting a business-like meeting with the love of your life is not the ideal evening, I will argue that it will empower your relationship in the long-run.

To get started, grab paper and a pen and gather somewhere comfortable. One of you will have to take the lead and write down the critical points of your conversation. During this exercise remember that developing a financial plan will take many iterations. So you should just aim to create a rough draft in your first meeting.

With all of that said, develop a list of your individual and future family’s goals and objectives. You should keep in mind that these are your personal life goals, not your financial aspirations. At first it will be difficult to separate the two as we often constrain our goals on our ability to afford them, however there’s no pressure as this is just a draft.

Prioritizing Your Goals and Objectives

Chances are pretty good that you will not be able to afford all of your goals and objectives when starting a new family. This is quite a common challenge as young families have many large expenses in their early years (mortgage, school loans, children, etc.).

With that in mind, you will most likely need to sit down with your future spouse and prioritize your goals and objectives. The prioritization of your future goals and, consequently, the focus of your financial management process is important to mutually agree on. This will help reduce the potential for misunderstandings and disagreements in the future.

To begin, take your completed list of goals and objectives and determine which is the most and least important to you and your future spouse. These will be your guides as you question which goals should be a higher or lower priority. Once complete you will be able to easily determine the ones that require funding before the others.

Creating a financial plan before you get married is a great way to get a deep understanding of your future spouse’s goals, objectives, priorities and financial management savvy. This plan doesn't have to be robust to be effective, just having the conversation is important.