In an ideal world, we would all be on the same page as our life partner when it comes to money management practices and even just basic openness and honesty about finances. However, the reality is that people rarely dedicate enough time to discussing the financial side of being in a committed relationship until after they get married.
Whether you know very little about your fiancé’s finances or you’re both completely open with each other about your individual and shared financial situations, here are 6 considerations to your married finances that you should make while engaged or immediately after you get married.
Who’s the Money Manager?
How will you manage money when you begin your new life together? If you’ve been cohabiting for a while before getting married, then this might be easier as you’ve already had to deal with paying for shared expenses like rent, utilities, Internet and food. Many financial professionals encourage newlyweds to meet with a financial planner shortly before/after getting married to plan out how they’ll manage their collective finances and who will be in charge of what.
Some people hate budgeting and planning for investments and other financial goals; other people love organizing expenses into neat spreadsheets and regularly updating their records to ensure they always know where their money is. If you and your partner have different levels of enthusiasm and expertise in the areas of financial management, then you should decide who will take the reins on your financial planning (or will you both work together on budgeting and saving?).
Joint or Separate Finances?
Another major consideration for newlyweds involves keeping finances separate or combining them. Some questions to consider here include:
- Do we want one shared checking account, our own checking accounts, or a combination of the two?
- Do we want to combine incomes and pay for expenses from a shared account or divide expenses proportionally based on our incomes?
- How many savings accounts do we need and how much should each of us contribute to each account?
- How will we plan for retirement as individuals and as a couple?
- Should we file taxes jointly or separately?
What Are Your Remaining Debts?
You should have a clear idea of how much debt you both have before getting married, but considering the exorbitant costs of weddings and honeymoons nowadays, you may have racked up some more debt before the wedding. Take time to go through all of your accounts – auto loans/leases, student loans, credit cards, personal loans, etc. – and write down how much debt is remaining for each of you.
If you’re combining married finances, then you should either focus on paying off the highest interest debt or highest balance debt first, while making minimum payments on the other accounts in the meantime. If you’re not combining married finances, then you should continue what you were doing prior to getting married: pay off your own debts in the most efficient way possible.
Of course, it can be a drag for one partner to struggle with debt while the other, debt-free partner gets to splurge here and there and accumulate more savings. Now that you’re married, consider helping each other pay off debts – even if they’re not yours – because you’re a team and it’s much more effective than letting the indebted partner financially fend for themselves.
What Are Your Income Trajectories?
How much do you both currently make? Which person’s job has the greatest potential for wage growth and benefits over the course of your career? How stable are the industries you’re working in? Are you planning to have kids at any point?
If you’re going to have children in the future, then you’ll likely need to figure out who should take more parental leave (if it’s offered by your employers) while the child is still an infant. In the past, it was almost always the woman who took on the stay-at-home parent role, but differences in income trajectories, career potential and personal preferences have made it less clear-cut about who should stay home with the kid.
Researching and discussing your income trajectories is also useful for identifying potential ways to earn more money by continuing your education or moving to a different part of the country.
Do You Need Life Insurance?
Life insurance isn’t just for parents; if both partners work and financially contribute to the household expenses, then you should take out a life insurance and disability insurance policy to protect yourselves against the possibility of having to live on one income temporarily or permanently due to injury/illness/death.
Term life insurance policies are ideal for newlyweds who want 20-30 years of financial protection and if you take out a policy while you’re still young and healthy, you’ll likely receive quotes for affordable monthly payments (as opposed to waiting until your late 30s/40s).
What Are Your Short- and Long-Term Financial Goals?
This is another conversation that should happen before the wedding, but it’s worth revisiting after you’re married, too. Some questions to guide your discussion include:
- How much do we need in our emergency savings fund? (3-6 months’ worth of expenses is the recommended minimum)
- What is our #1 financial goal for the next year? Next 2 years? 5 years? 10 years?
- How much money should we be investing and/or saving each month for our short- and long-term goals?
- Do we want to buy a home or rent indefinitely? If homeownership is a goal, set deadlines for meeting your down payment savings goals to increase your chances of success.
- Are we both saving enough money for retirement? What can we do to increase our retirement savings?
If you’re looking for places to keep traditional investment accounts, you might want to check out investing with Betterment or Stash Invest.
The newest robo-advisor on the market called M1 Finance gives the more established, sophisticated investors great investing options. M1 Finance simplifies the investment process for beginning and experienced investors alike. Unlike other robo-advisors, M1 Finance does not charge a fee, and it gives you the option of taking more control over your investments if you want them (and less if you don’t).
Many of the aforementioned questions should be discussed in-depth before marriage, but if you didn’t cover every/any question before your special day, then there’s plenty of time to get back on track with your shared financial management practices and goals.
Remember: you’re both parts of the same team now (even more than when you were just dating or even engaged), so although money-related discussions and married finances can be difficult, don’t forget why you married each other in the first place if/when these conversations and plans spark frustration and/or conflict.
