How to start planning for marriage financially

Getting engaged is a big deal, but it’s a decision you shouldn’t take lightly.

Hopefully, if you’ve reached the point of considering engagement, you’re sure you’ve found the one you want to spend the rest of your life with. For a long and happy marriage, consider the points below first to ensure you’re not only emotionally, but financially ready to get engaged.

Studies showed that almost 70% of Americans have less than $1,000 in an emergency savings account, and 34% had nothing.

Before you even think about getting engaged, you’ll need to get your savings situation in order.

Why?

Because getting engaged is just the start of a tidal wave of incoming expenses—a wedding, a house, babies, etc. Get yourself situated with a solid emergency savings now so you don’t have to worry later.

My recommendation is to save up six to nine months of expenses.

It may seem like a lot, but you’ll be thankful you took the time to build up a safety net before diving into an engagement and, ultimately, marriage.

If you can’t swing six months of savings, try for at least three, but after you get engaged make sure you’re working your way up to six to nine months of savings.

One of the most important things you can do financially before getting engaged is get a reality-check on your spending habits. Those of you that regularly read my pieces on Money Under 30 will know I’ve recently become a huge fan of You Need A Budget (YNAB).

I’ve never in my life been one to sit down and create a budget, but YNAB makes it incredibly simple. In fact, by doing a regular budget, we’ve been able to spend less and save more than we ever have. And that’s with a new baby, too.

The key is that I know where my money is going and I basically pre-spend it (or as YNAB calls it, give every dollar a job). This also “ages” my money—so I’m usually one to two months ahead of expenses.

The point I’m making, though, is to get a grip on your spending and find out where you can cut back. You want to start off your new life together in a positive way, not correcting negative spending habits.

» MORE: Check out our full YNAB review.

Data shows that people in their 20s have only about $16,000 in retirement savings. While that’s better than nothing, it can still be a lot better.

Just like emergency savings, you’re going to want to make sure you’re on a good trajectory for retirement, even if you’re in your early 20s.

Things will change for you financially after you get engaged and married, so make sure your retirement savings is getting the full match from your employer. If you can contribute more than the match, then go for it.

Another thing you may be tempted to do as expenses (like a wedding) pop up is borrow money from your 401(k) or other retirement plans. I strongly urge against this—it’s a terrible financial move in my opinion.

Plus, if you’ve built up your emergency savings and got your spending habits in check, this shouldn’t even be a discussion.

If you don’t already own a home or property, more than likely you’ll want to eventually.

This probably mean buying a home together—a big cost. If that’s the case, then you’ll need to go back to the first piece of advice and determine a plan for your emergency savings.

If you do own property, there are pros and cons. On the positive side, you and your new fiance/spouse will have a place to live once you get married (or before, depending on how old-school you are).

On the downside, owning a home brings debt into the relationship—even if it’s “good debt”. You’ll need to factor in the monthly mortgage payment, home insurance, and other household expenses as part of your new life together.

There’s also the possibility that your new spouse (or you) no longer want to live in the home once you’re married. If that’s the case, you’ll need to determine a plan for where you’ll live and how you’ll afford it.

With the average household now carrying more than $16,000 in credit card debt, it’s a smart choice to evaluate your current debt situation.

If you have less than $16,000, you’re better than average—but unless you have no debt, (which is highly unlikely) you can do better. If you owe more, you may need to seriously consider holding off on your engagement until you can work the balances down a bit.

I’m not saying you have to be completely debt-free before you get engaged, but you should at least have it at a manageable level. 

Regardless of how much debt you have, you shouldn’t get overwhelmed. Like Shawn Achor talks about in the book The Happiness Advantage, use “Zorro Circles” to create smaller goals for yourself so you end up being successful.

If you’re below $16,000 in debt, establish small goals to eventually get to $0. If you’re well above that, focus on just reducing it, little by little. With goals in mind and a little determination, you’ll work it down to manageable level.

Much like you don’t want to start off your engagement with no savings, you also don’t want to start it off with bundles of debt.

Your future spouse should understand this (and be able to support you emotionally), too. Which leads to my next point…

Money is one of the most common reasons people end up getting divorced. Not only do you need to talk about money, but you need to be incredibly open and transparent about it. I’m not here to give you relationship advice, but I am giving you my personal opinion on finances in marriage—don’t even think about getting engaged until you know you’re both on the same page with money.

This may seem odd, as many couples don’t even get to this discussion until they’re married. My advice is to tackle it early on. How would you like to find out that your spouse had tens of thousands of dollars in debt that you didn’t know about prior to getting married?

This can put a serious strain on your finances, but also your relationship. So it’s best to get it out of the way early.

Talk about things like your position on money—do you see it as a vehicle to buy stuff, or do you see it as a vehicle to help you retire at some point? Discuss how money was handled and talked about within your own families growing up—this often plays a huge role in how we develop financial habits.

Then figure out how you’ll manage your money as a couple. If you have debts going into the relationship, how will you pay them off? How will you manage savings? How will you pay the bills? What are each of your financial goals? 

As you can see, there are plenty of things to discuss with your future spouse, and now is the time to do it. If you can’t bring yourself to be comfortable discussing money with them yet, then you may not be financially ready to get engaged.

If you’ve gotten this far, you’re surely on the right track to feeling more confident in getting engaged (at least financially). But there are a couple of other things to consider…

The Engagement Ring

David has written several pieces on the financial aspect of getting engaged—namely the engagement ring. He walks you through how much to spend, how to buy a ring online (and how to save big on that), and finally how to finance a ring if you need to.

Kat also wrote an article on some alternatives to buying a diamond ring, which is immensely helpful. Know what you’re buying and how much you’re spending by using our research.

The Wedding

Getting engaged is only the first step. Paying for a wedding comes next. You may or may not be surprised by how much a wedding actually costs, but we’ve put together an awesome guide on how to save money while planning an incredible wedding day.

So are you financially ready to get engaged?

To find out, make sure your savings, debt, and all other financial questions are answered (or at least addressed) internally. Then, be sure to have a thorough and transparent conversation with your future spouse about money—prior to getting engaged. This will help to ensure a lifetime of financial happiness together.