You spend a lifetime preparing to walk down the aisle.
You’ve met the perfect person. You’ve found the perfect attire. You’ve danced. You’ve celebrated. Then, you spent a week in paradise on your honeymoon recovering from the big day.
Now, as you and the love of your life walk off the plane to begin a new life together, a wave of cold sweat and a single question strikes you.
You’ve scrimped and saved to afford the perfect ring and the perfect wedding. So, here are some simple financial steps so that you begin building a road map to a sound financial future together.
- Whose benefits should we use? Health and dental care can be very costly deductions from your paycheck. As a married couple now, it is a good idea to take a close look at your benefits and determine if you can save some money by combining coverage. Remember, getting married is often considered a qualified event so you likely don’t have to wait for open enrollment season to make changes. Call your HR department and ask.
- Change your beneficiaries. Every investment account and every insurance policy that you hold offers the ability to list beneficiaries. Before getting married, you probably listed a parent or a sibling as your beneficiary. In case the worst happens, the last thing you want your spouse to deal with is the stress and pain of trying to chase down benefits. This is not a fun process, but you have to eat your vegetables here. Track down any accounts you have and list your new spouse as the beneficiary.
- Should we combine our finances? There are a lot of pros and cons to this powder keg. Creating a combined bank account will make it easier to pay household bills and track your budget. You are married now. Your spouse is not a roommate. You might not want to be Venmo-ing them to pay bills.
- Have the debt discussion. Hopefully, you had this conversation long before you walked down the aisle, but it is important to get a handle on everything you and your spouse owe. This includes student loans, car loans, and credit cards. Be open and honest. It is hard to save for the future if you don’t understand the debt you are carrying with you into the relationship.
- Select a CFO. Hopefully you have married the love of your life, but hopefully you (or the person you are marrying) is financially sharp. It is important to lean into your strengths here. While you are both in the honeymoon stage, one of you needs to step up and become the CFO and manage the bills. Maybe to balance things out, the other person handles more of the household chores.
- Build a budget. This is going to take a few months, some difficult conversations, and some compromise. It begins by taking a hard look at your earnings. Your living expenses, including rent, food, and utilities, are going to eat up about half of your paycheck each month. From the remaining half, you should be saving about 10%, 25% to pay off debt, and 15% on discretionary spending, like going out to dinner, those purchases from Amazon, and that morning Starbucks. This is all very personal, but I like to use these numbers as a baseline.
- The housing conversation. I know the dream of home ownership was probably a conversation at some point during the honeymoon. Where and how you live is a personal decision that you need to consider together. However, and wherever you decide to live, you should begin setting money aside for a future 20% down payment. You received some wedding gifts, and you might have some savings left from the wedding that you are bringing into the marriage. What is your cumulative number for a down payment? Subtract your savings and determine what you need to build towards. Setting a goal is important.
- Talk to your trusted advisors. You’re going to have a lot of questions from here and that is okay. Make a list and begin asking your CPA and your advisor. Should we file jointly? Should I open an IRA? How much should we put in our 401(k)? Take a deep breath and talk to the people you trust.
After the honeymoon is over, it is a great time to get situated, hammer down at your debt, and begin dreaming about your future together. Don’t let the inertia settle in. Before you ease back into your routine, sit down with your new spouse, and make some financial decisions so you can chart a better tomorrow together.
Stephen Carrigg is the Director of Investment Analysis, Private Wealth Advisor at Integrated Partners. Send him an email at firstname.lastname@example.org
The opinions voiced in this material are for general information only and are not intended to provide specific advisor or recommendations for any individual. It does not take into account any investor's particular investment objectives, strategies, tax status or investment horizon. You should consult your tax and financial advisor.