Financial Planning for Newlyweds

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One of the most important planning elements goes beyond budgeting for the big day: financial planning as newlyweds.

Money might not be the preferred topic of conversation as you and your fiancé cook dinner or walk through the park, but it’s truly the foundation for building the life you wish to live. Have a proper, thorough discussion on spending habits; does your partner live paycheck to paycheck or save every penny? What are their thoughts on large purchases? If you disagree or find differences, don’t panic. Acknowledge and communicate separate habits as you work through this financial checklist.

ID Basics
If you’re changing your name, contact the Social Security Administration to obtain the application for a name change and instructions. You’ll need to provide identification and proof of marriage; if you don’t visit a local office in person, original documents can be provided by mail and will be returned to you. Having the correct name on documents discussed here is crucial.

Next, update your driver’s license, employer records and voter registration records. Don’t forget bank and credit card accounts, too.

Crunching Net Numbers
You’ve sacrificed a femininely decorated (mostly pink) apartment and he’s learned to love your rom-com binge sessions; now it’s time to unify yet again, on the fiscal front. Calculate your net worth as a couple to recognize where you stand monetarily. Gather a list of combined assets, debts, credit card statements and personal credit reports. Analyze these together and keep this report in mind as you brainstorm your financial goals.

New To-Dos
Post-nuptials, your focus is probably enjoying your Hawaiian honeymoon. Nevertheless, there a few significant steps to take immediately after you’ve exchanged vows.

First, update your beneficiaries on investment accounts, 401(k) plans, savings accounts, retirement accounts and insurance policies. Second, give your spouse power of attorney and designate them as a health care proxy. This provides you with peace of mind, knowing your partner can make important legal decisions regarding your health and finances in the event that you become ill or disabled. Consult with an attorney to update or write your will. These to-do list items will ensure that your assets are inherited by your spouse and your wishes are adhered to properly when you pass away.

Inspect Insurance
In addition to reviewing personal accounts, take a look at your various insurance policies. Ensure that there are no lapses in coverage or duplicate coverage. If you don’t have life insurance, now, the start of your new family, is the time to contemplate buying some.

Consider the type you might need, whether it’s to support your family, cover education or replace income. Combining households usually means obtaining a single renter’s or homeowner’s insurance policy. Review health insurance policies to decide if it makes more sense to keep both plans or add your spouse as a dependent to one policy, depending on employer restrictions.

Goal-Setting Session
Setting financial goals is essential to starting your marriage off on the right foot. You’ve probably already discussed individual debt, retirement plans and maybe even when you’d like to start your family; now’s the time to list your combined goals and plans of action.

Are you dreaming of renovating an old Victorian home or traveling the world together in retirement? Maybe you’d just like to pay off your student loans within the next five years. Whatever your goals are, it’s important to physically jot them down as well as a feasible time frame. Review every few months to ensure that you’re staying on track.

Basic Budgeting
As you send out the last of your thank-you notes and swoon over the wedding photos, make “create a spending plan” one of your final newlywed action items. Transitioning from being the sole supervisor of your expenses to combining and balancing accounts can be trying. Creating a budget will allow you and your spouse to have spending control without nitpicking each transaction.
Calculate your combined income and all the monthly purchases you generally make. Subtract your monthly purchases and bills. If you have money left over, discuss where this money will go, whether it’s into savings, treating yourself, a rainy-day fund or debt repayment. Agree to review your budget regularly and keep up with your financial goals. The reason behind creating a budget is to guarantee that you’re on the same page when it comes to making joint decisions; communicate any disagreements or unexpected expenses.

Studies show that money problems are a leading cause for divorce. You can prevent this by coming together and discussing your spending habits, budgets and savings plans before tying the knot. As the saying goes, “what’s yours is mine, and what’s mine is yours.” Approach financial discussions openly and as a team. Start strong, affirm spending and savings habits together, then check in frequently to keep your finances on track.

Sources: davisandcompanycpa.com, forbes.com, k-state.edu, ssa.gov and thebalance.com.