Here's How to Achieve Financial Independence Before Marriage

According to experts.
couple finances
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Esther Lee - Senior Editor, The Knot
by Esther Lee
Esther Lee - Senior Editor, The Knot
Esther Lee
Senior Editor
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Updated Jan 04, 2021
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With financial independence being the priority before Gen Z and relationships last into marriage, there are several steps young millennials and older members of Gen Z (in fact, all couples) can take in order to get to a place of monetary growth and ease.

"If you are both financially independent, it can mean there's more of an equal balance in the relationship," says Colleen McCreary, Chief People Officer at personal finance company Credit Karma. "It means you both have autonomy to spend your hard-earned money. And, it can mean there is more of a sense of equality between you two rather than one person having more control on the spending and saving than the other." Beyond financial independence, see what else comes before Gen Z and relationships, according to our study, and expert tips on how to achieve stability.

Determine Your Goals

"A good first step is to be transparent with your financial goals to see if they are aligned," says McCreary. "This means being honest about your current financial situation and sharing things you hope to pay off or save for in the short and long term. They don't necessarily need to match - it can just be helpful to understand how your partner is thinking about saving and spending their money."

"Start out by writing out your financial goals and when you want to achieve them," says Kelly Lannan, Vice President of Young Investors at Fidelity Investments. "These may include building up emergency savings, paying off a loan and more… We hear that Gen Z may need help prioritizing their money goals and knowing how to get started, but the intent is there. Being focused on financial independence in many ways is connected to our careers, as we usually see an increase in salary we get promoted."

Audit Your Financial Picture

One practice (do it after a workout or on a slow Sunday) is to create an inventory of assets, according to Fidelity advisors. First, you track the assets you own in one column, which includes savings or retirement accounts. Then, the other column tracks the money you owe, such as student loan debt or credit card payments. Mortgages and rents are also included in the second column.

"Conduct a realistic audit of your financial habits and spending patterns," suggests McCreary. "Ask yourselves if there are any recurring expenses you can cut down on in order to boost your savings or pay off any debts. Even if it seems small, it can add up in the long run and help your bottom line. For example, can you dedicate more nights to cooking instead of going out? Can you opt out of future costly experiences and instead opt for something that is still fun but costs less? Ask yourselves if you're being influenced by what you're seeing others do on social media, or if you really want to buy or do something and it's worth the spend."

Budget… And Stick to It

As good habits are formed with repetition, knowledge for how to maintain a healthy financial picture is fundamental to achieving financial independence in due time. Enter Fidelity's 50/15/5 budgeting guideline: a set of rules to help with saving and spending objectives. "Set aside 50 percent of your income to cover essentials; 15 percent towards retirement; and 5 percent toward short-term savings," says Lannan. "The remaining 30% is for discretionary expenses. If you're contributing to a retirement savings plan like a 401(k), you're already an investor! A financial professional can help review options and ensure that your investments are aligned to your goals and timelines."

"Becoming financially independent takes hard work and dedication. It won't happen overnight, and it requires you to be honest and realistic about your financial situation," McCreary adds. "Sometimes, small actions can yield bigger long term results. Use your financial goals as your north star."

Organize Where You Can

"Organize important documents such as a will, healthcare proxy and a power of attorney to give yourself greater peace of mind," says Lannan.

Have 'Money Dates' Regularly

"Unfortunately, sometimes these conversations can be tricky or awkward. One way to make sure you're staying on track is to set up a money date," says McCreary. "This just means dedicated time, in a neutral setting, to check in on your goals, your financial standing and if anything has changed." These financial touchbases aren't a one-time conversation: "Given your goals and habits evolve over time." In fact, they should be held two to three times a year.

"As a couple, it's important to have honest money conversations, such as how you view money, what your financial obligations are and what your goals are to ensure you're on the same page," Lannan explains. "But, you don't need to navigate these tough conversations on your own! Take advantage of free resources."

Suggestions include mobile banking, financial planning, g with a professional is a common route for those who seriously want to sweep their finances for a more stable future.

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