The honeymoon is over, the thank-you cards are in the mail and it’s time to think about your financial future.
While far from romantic, it’s important that you and your new spouse sit down and figure out how you will proceed, because clear communication and a solid plan can play a big role in helping your post-wedding bliss stick around.
The key to any
and that holds true
when it comes to your
finances, as well.
Disagreement over money is one of the chief sources of tension for couples, numerous studies have shown. A remarkable 88 percent of adults 25 to 34 who are married or living with a partner said financial decisions are a source of tension in their relationship, according to a recent survey by the American Institute of CPAs and the Ad Council.
The fact is, the topic of money and investing is impossible to avoid as you build a life together, and plan and save for retirement and other major financial goals. But it doesn’t have to be a source of friction.
Here are six smart financial to-dos now that you’ve said “I do” to set a strong financial foundation.
1. Lay All Your Cards on the Table
The key to any strong relationship is communication, and that holds true when it comes to your finances, as well.
Get your financial partnership off to a good start with a thoughtful conversation about the current state of affairs. To prepare, each of you should jot down a list of all your financial accounts and their respective balances. Include bank accounts, retirement accounts, credit cards and loans. It might not be a bad idea to bring the most recent statements with you to the conversation. Now is the time to bare all.
Even if you already started talking money before you walked down the aisle, it’s a good idea to sit down and talk again.
2. Look at Your Spending
Now that you know where everything stands, take a look at your combined budget.
Where can you save? Where can you consolidate? This is a good time to look at those recurring charges, such as streaming services or newspaper subscriptions to see where you may be doubling up and can cut back and save.
You may also want to conduct a credit card inventory. You can use this opportunity to ensure you aren’t paying unnecessary annual fees, or to create a strategy to maximize your rewards points. But be aware: the length of your credit history is an important part of your credit score, so think carefully before closing your account on old cards without first looking into other options, such as transferring the account to a no-fee card that you can leave at home.
The same goes for other big-ticket monthly items, such as your health or car insurance to see where you may be able to save. You may get a break on car insurance if you are married, so it’s worth asking for a new quote. Meanwhile, you’ll also want to carefully examine healthcare options. While you may be able to save some money by both signing on to one or the other of your employers’ plans, make sure both of you are comfortable with the coverage and level of care you would be receiving.
3. Decide on an Approach
Do you want to combine all your accounts? Keep them separate? Find some middle ground between the two options?
While it was once considered the norm to combine accounts, that won’t likely be the best option for everyone, particularly for older couples, those bringing substantial assets into the marriage or those with children.
Regardless of whether you plan to combine accounts, honesty and trust are essential. As you decide which path to pursue, you may want to ask yourselves a few questions.
Do you have a large difference in earnings? Would one spouse feel resentful having equal access to an unequal income? Does one of you have a large amount of debt? Would you prefer separate accounts for your “fun money?” Do your spending styles mesh?
The right move for you will vary based on these and other factors. But be sure to have an open and honest conversation. That is the best way to ensure there are no hard feelings or resentments that develop or linger over time.
4. Discuss Your Goals
Whether or not you decide to combine accounts, it’s important to remember that you two are a team, and it’s a good idea to be on the same page regarding your financial goals. Step one should be to discuss your priorities and create an action plan.
How do you want to tackle any outstanding debt? Do you want to buy your forever home in the next few years? Is it important to you both to save for an annual vacation? How will you both save for retirement? Is your combined emergency fund big enough to cover three to six months of your combined expenses?
It’s a good idea to discuss these matters together to help determine what you can realistically afford and how to priorities competing desires.
5. Divvy Up Responsibilities
It’s generally a good idea for each of you to have a part to play when it comes to your financial health as a couple, even if you decide to fully join accounts. The fact of the matter is your marriage is a partnership, and either of you should be able to fully take the reins if the need arises.
You may want to consider dividing up spending or savings responsibilities, so you can both have your own system and avoid unnecessary tension, but still have everything covered. Perhaps you’ll ensure the mortgage is paid and manage the retirement savings accounts, while your spouse manages the utility bills and short-term savings accounts. Figure out what works best for you.
If, however, you decide that one person will be in charge of all financial matters, you should both be financially literate and fully aware of the state of the family’s finances.
Either way, it’s a good idea to have monthly or quarterly check-ins to talk about your spending and your progress on savings or debt reduction goals. And be sure to organize passwords, account information and other important documents somewhere safe that you both can access.
6. Update Your Paperwork
While far from exciting, now is an important time to update a lot of important paperwork.
To start, your new married status may impact your tax situation. You will now have to determine if you will file jointly or separately, which means it may be time to look at your W-4 withholding. Check out the Internal Revenue Service’s Withholding Calculator to see if you need to make any changes.
Now is also a good time to update—or establish—your will. If you don’t have a will or any other end-of-life plan when you die, you’ll become what’s known in legal terms as intestate, and a court will go through an often lengthy legal process to determine your rightful heirs. This can be a painful process for all involved, but you can prevent that by taking action now. For more information, check out 5 Things to Know About Preparing A Will.
Finally, while you’re at it, be sure to update your beneficiaries on retirement and insurance accounts. Unlike your personal and real property or your taxable investment accounts, these assets aren't transferred by will or trust when you die. Instead, they are transferred to your beneficiaries, which can be an individual or institution, so it’s important you update this information as well.
While this all may seem like a lot of work to take on so soon into your marriage, taking these few steps now can go a long way toward extending your honeymoon period.
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