Once the last vow has been exchanged, the last toast made and the last dance danced, reality returns. For many newlyweds, it’s an unfamiliar reality, with a fresh set of financial considerations and responsibilities.
Getting married means lots of changes, some emotional, some practical. So while they bask in the afterglow of the Big Day, newly married couples would be wise to take stock — and take control — of their financial situation, using the following 10 tips and tactics from the Financial Planning Association® (FPA®) to help guide them:
1. Put it all out on the table. Sit down with your spouse and take an inventory of everything each of you own and owe — from investments and retirement plans to student loan and credit card debts. “To start, both of you need a clear understanding of where you stand,” said Michael Baras, CFP®, based in Long Island, N.Y. “You don’t want any ugly surprises.”
2. Develop a spending plan. Track how much money you take in as a couple and what your expenses are. Then develop a plan to put the excess income to constructive use for retirement, etc.
3. Commit to jointly saving for retirement. Starting your retirement savings now will go a long way toward ensuring a comfortable financial life later. So if one or both of you have access to a workplace retirement plan, commit to setting aside as much as possible for your later years. Take advantage of employer matching contribution and automatic contribution programs whenever possible. And if you’re self-employed or your employer doesn’t offer a retirement savings plan, set one up yourself, with the help of a financial planner.
4. Planning to buy a home or have a child? Start setting aside money in a savings vehicle, such as a money market account or a high-interest savings account, so you’re ready to meet the financial demands that come with these kinds of major milestones. Additionally, you should set up an emergency with three to six months of living expenses for those unexpected bills.
5. Decide how to handle your bank and investment accounts. Will you keep all your accounts separate, consolidate them all, or do a little of both?
6. Take stock of your workplace benefits. If you’re both working, decide if one spouse will join the other’s health plan, for example, or whether it’s worth keeping separate workplace plans. One spouse’s plan might be significantly stronger than the other’s. Talk with the Human Resources professionals at work to weigh the pros and cons before you decide.
7. Assess your insurance needs. Is your insurance coverage adequate now that you're a couple? Do you have an existing policy? If so, to what extent does it need updating to reflect your new marital status (such as making your new spouse the primary beneficiary)? New couples should meet with an insurance expert, said Baras, to discuss their insurance needs, from disability to life insurance.
8. Talk tax strategy. Lots of money could hinge on how you handle your tax situation now that you’re married. Determine—with the help of a tax expert, such as an accountant—what the most favorable tax filing status is for you and your spouse. To file jointly or separately? To itemize or go with the standard deduction?
9. Get each of your credit scores and act accordingly. It’s vital for each person to build a solid credit history, said Baras. So if one spouse has only a minimal record, take steps to build that record. If one spouse has a subpar score, take steps to increase it.
10. Find a financial expert you trust. Marriage is often accompanied by new financial issues, some of them complex. A savvy financial planner will take all the elements of your financial picture, together with your goals and aspirations as a couple and as individuals, to provide you with a comprehensive financial blueprint for the short term and the long run.
To find a financial planner who specializes in helping newly married couples, search the Financial Planning Association’s national network of financial professionals online.
This article was submitted by the Financial Planning Association, the membership organization for the financial planning community. FPA members are dedicated to supporting the financial planning process in order to help people achieve their goals and dreams. Submission of this article does not imply an endorsement or recommendation of the Financial Resource Center site.