When you meet the person you want to spend the rest of your life with, you might be excited to get engaged. But before you do, you should first know how they deal with their finances. This way, you can avoid arguing or having problems with money after a few years.
To help you get financially ready to propose or say ‘yes,’ here’s what you can do.
1.Have an emergency fund
According to a research study, around 70% of Americans have less than a thousand dollars in their emergency fund, while 34% have zero dollars.
Before you get engaged, you should have savings or an emergency fund. Once you propose or say ‘yes,’ this is just the beginning of the expenses you will incur. Get ready to spend on the wedding, house, children, and more. To prepare for this, make sure you have emergency savings — at least for six to nine months of expenses.
It may be hard to achieve, but if you can, you will have a safety net. If it’s impossible for you, try to have enough for three months of expenses at least.
2. Track your expenses
Before getting engaged, you should know your spending habits. Not only should you have an idea of your monthly expenses, but you should also create a budget. This is one way to help you spend less and save more.
You should always know how much money you earn and how much you spend. If you can, try to look for expenses that you can cut back on. This is a good financial habit to have and to bring when combining lives with your partner. Start your marriage with proper money management instead of correcting bad financial habits.
3. Prepare a retirement plan
Research shows that the retirement savings of people in their 20s are around $16,000. Even if it’s more than nothing, it can still be better. You should consider planning for a higher amount even if you’re just in your 20s. Get the full match from your employer, and if you can contribute more, why not?
You shouldn’t use your retirement savings for the wedding or other things. If you have to borrow money from your 401k, then don’t get engaged yet.
4. Plan your future home
If you’re getting married, chances are you will want a home or property. If you already have one, there are advantages and disadvantages. The good thing about having a home is that you already have a place to live when you get married. On the other hand, having a home brings debt such as mortgage payments, home insurance, and other expenses.
There’s also a chance that you have to look for a new home, if you already have one, since the two of you may want a new place. Discuss this with your future spouse and find out if you can afford to get a new home.
5. Figure out your debt situation
Studies show that an average household has $16,000 in credit card debt. If you have less than these, good, but you can still try to lessen it. If you owe more, you should try to reduce it before getting engaged.
You don’t have to be debt-free, but at least try to lessen it. Try to have an end goal of zero-dollar debt. Similar to starting your new life with savings, you should also start it with minimal debt.
6. You should be able to discuss finances with your future spouse
With the high divorce rate, the most common cause is money. That’s why you should be able to talk about money with your future husband or wife. Be open and transparent about your finances. You should also be on the same page regarding money — such as financial habits, future plans, and more.
Some couples think that this is a discussion reserved for after marriage, but you should be able to discuss this before you get engaged. You don’t want to marry into a $10,000-debt. Not only will it trouble you financially, but it can also affect your relationship.
Before we conclude…
If you got through the first part, then you’re more or less financially ready to get engaged. But before you do, here are a few things you need to consider.
Engagement ring expense
If you’re the one who’s going to propose, then you will need a wedding ring. First, determine how much you are willing to spend. After deciding, look for a place to buy a ring and research where you can get the best deals.
The engagement ring is just the first of many. The next big expense will be the wedding. If you don’t have an idea of how much a wedding really costs, then you might be surprised. But it will still depend on how big your wedding is going to be.
Discuss details about your wedding: where are you going to get married, how many are you going to invite, find out the estimated cost of the dress, catering, wedding cake, wedding organizer, and more.
Do you think you are ready to get engaged? Well, at least financially?
If you have enough savings, minimal debt, and financially transparent with each other, then you are more prepared than other couples. Aside from an emotional standpoint, you should also know what you’re financially getting into. This way, you can be happily married for a long time without having a lot of problems with your finances.
Based on Materials from Money Under 30
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