Marriage is more than just an affirmation of two people’s love for one another. It’s a joining of two lives. Once you become husband and wife, you become one household with one set of finances. While you might keep separate bank accounts, any money that one spouse makes or any debt that one spouse incurs now belongs to both of you.
That’s why it’s so important that newlyweds do some serious financial planning. Ideally, it should start before you tie the knot. At the very least, it needs to get underway as soon as the honeymoon is over. Also before you know it you start to look for a new home and compare mortgage rates as well as taking on other debt.
Here is some advice to consider as you start your lives together.
How much debt is each partner bringing to the table? In a perfect world, everyone would go into marriage debt-free. Unfortunately, it rarely works that way anymore. Make a list of your debts, and get to work paying them down. If possible, it’s best to get everything paid off before you incur any new debt as a couple.
Have a nice, long talk about the details of how you will be handling your finances. Who will be responsible for paying the bills? Who will balance the checkbook? Will each partner keep separate money for expenses and discretionary spending, or will it all be pooled together? How large does a non-routine purchase need to be before it should be discussed beforehand? Making these decisions early on will help avoid misunderstandings and arguments down the road.
How big of an emergency fund do you need? These days you should have anywhere from 6 to 9 months’ expenses as a target. It’s important to have money put away for unexpected expenses or in case of job loss, so start working on your emergency fund as soon as you have your debts under control.
Examine your retirement savings options. Both of you should be contributing to your 401(k) plans at work and taking advantage of any matching funds that your employer offers. Beyond that, it’s probably best to get your debts paid off and build up some savings before you start investing heavily in retirement. But once you have all that in order, saving for retirement should always be a high priority.
Consider your life insurance needs. Unless there are children involved, you don’t need a large policy. But it’s a good idea to at least purchase enough insurance to cover your final expenses and give your spouse a small financial cushion. If you have existing policies, be sure to change your beneficiary to your spouse.
When it comes to marital finances, the most important thing you can do is communicate with each other. Both parties need to know what’s going on with the budget at all times. If you keep secrets from one another, it can destroy both your finances and your marriage. Simply having an honest discussion about your finances once a week can help you head off financial problems before they take hold.
Tags: Banking Advice, financial planning, newlywed finance
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on Wednesday, April 27th, 2011 at 7:25 am and is filed under Savings.
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Marriage is more than just an affirmation of two people’s love for one another. It’s a joining of two lives. Once you become husband and wife, you become one household with one set of finances. While you might keep separate bank accounts, any money that one spouse makes or any debt that one spouse incurs now belongs to both of you. 
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