In Love And Money: How To Plan For Financial Success After The Wedding
Getting married is about much more than just the big day itself. Talking with your future spouse about goals, values and priorities is imperative to preparing for a successful long-term partnership.
The two of you should ask the following questions: Would you rather spend your extra money on a vacation or spend it on material things?
Is spending extra on future children’s education more important to one of us than the other?
Although it may seem far away, ask your spouse when he or she envisions him- or herself retiring.
What does your spouse want to do in retirement? Hashing out these priorities before the big day helps you prepare for important compromises in the future.
You should also have a conversation about your previous experiences with money. Share your first money-related memory with one another.
This can often provide key insight into why your fiancé thinks or feels the way he or she does about money.
Understanding each other’s experiences with money can help you determine how to best combine your financial lives going forward, and it can give you insight into where each other may be coming from.
There are a number of ways married and engaged couples merge their financial lives.
One thing that can be done immediately after getting engaged is to open a joint bank account that is earmarked specifically as your “wedding account.”
Divorced parents on bad terms, grandparents or other family and friends can make contributions to that account if they would like to help pay for some of the costs.
Once you tie the knot, one option is for each of you to keep your prior existing individual bank accounts and continue with the joint wedding account.
Another option is to close your existing individual accounts and open a single joint account.
The bottom line is that there are many options, and ultimately, it just depends what works best for you and your spouse. There isn’t a right or wrong choice here.
When it comes to your credit cards, closing the accounts you’ve kept as individuals may not be the most beneficial action to take, considering the longer you’ve had the card open, the higher (or more positive) impact it has on your credit score.
With that said, you can each call your existing credit card companies and simply add another signer to the account, in essence, creating "joint" credit cards.
It is important to note credit history is tracked individually, so be sure both of you keep your prior cards open even after you get married.
Once you are married, be sure to review both of your employer benefits, too.
Getting married is a "qualifying event" in the eyes of your HR department, so you get an extra open enrollment period allowing you to add your spouse to your benefits if it makes sense to do so.
Before you do, be sure to review the coverage and the premiums thoroughly because once you make your election, you are stuck with it until the next open enrollment period.
One couple we worked with assumed adding the husband to the wife’s employer-offered health insurance plan would be less expensive than paying out of pocket, but it ending up costing them an additional $500 a month.
Joining health insurance plans, along with dental and other benefits, can be a huge saver, though. So, check what your employers offer before your open enrollment period ends.
With all these initial moves crossed off the list, it is important to stay connected with one another about your financial lives.
One way we recommend couples work together to manage their financial lives going forward is to have quarterly or semi-annual financial meetings.
Just like you would in any other meeting, you want to have an agenda prepared ahead of time.
On your agenda may be short-term goals, like buying a new couch or going on a vacation, but you should also discuss long-term goals, such as building your emergency fund, paying off credit cards, student loans and saving for retirement.
We give our clients a sample agenda to get them started. Going over your agenda together in your meetings helps to keep things on track as you work toward your goals together.
After establishing your big-picture goals on your financial agenda, we suggest breaking them down to more manageable bite-sized goals.
If your goal is to pay off all credit card balances and student loans you have, but your balances are $50,000, that is a large goal and will probably span several years. T
o make saving and paying down debt more fun, track your savings to help keep yourselves motivated.
Agree that you will pay down $5,000 this year, or better yet, $416 per month. Each month you make the extra payment, check it off your goal list.
Most people like the feeling of checking something off the list and marking it as complete, so this will help you stay inspired to keep going.
If not addressed early on, finances can be a source of conflict in a marriage.
It’s important to follow these steps and make sure you and your new spouse are on the same page when it comes to money and your financial goals.
Like anything else in marriage, open communication is the key to success.