Wedding season is in full swing and whether you’ve been married for a month or a year, there’s no time like the present to sit down with your spouse and make sure you’re on the same page, financially speaking. If you’re not sure where to start, we’ve got six savvy tips for you to follow together so you can maximize your financial resources while minimizing the conflict in your relationship.
1. Figure Out Where Your Finances Stand Today
Marriage is the beginning of a joint life together, and that means you both need to be honest about how you’ve independently managed your finances up to this point. Whether good or bad or likely a mix of the two, you need to sit down and go over both your current savings and debt. For savings, remember to include both basic savings accounts, any investments, and retirement plans through work or other sources.
For debt, add up everything you own on credit cards, student loans, car loans, and even a mortgage if one or both of you have bought a house already. All this information helps you understand what your big picture looks like when you combine your household.
2. Determine How to Share Money
Your next step as a newly married couple is to figure out how you want to share your money. Do you want a joint account where all your earnings go? Separate accounts for discretionary spending? Or do you want to keep everything entirely separate? These are important questions to delve into because they lay the foundation for how much transparency is expected.
Also begin discussing each of your goals for the short-term, mid-term, and long-term. This involves some of those big-picture questions like if and when you want to start a family or how much you want to save toward vacation each year. Be open with your responses and remember that both of your opinions are equally important.
3. Make Intersecting Budgets
Once you have an idea of how the money will be physically managed in terms of accounts, the next finance tip for newlyweds is to talk budgets. Divide up how bills are to be paid along with who’s responsible for making the payments. This helps to make sure nothing falls through the cracks because you assumed your spouse was taking care of a particular bill.
You should both also be aware of how money is being spent—secrets in marriage are never a good thing. For larger purchases, consider what amount can reasonably spend on a single purchase without a joint discussion first. For example, maybe anything over $100 should be a decision made by both individuals. Talk about it together and decide what feels right.
4. Plan for Taxes
When you get married, you’ll probably start filing your taxes jointly. At work, you both need to fill out a new Employee’s Withholding Allowance Certificate (Form W-4) to update your marital status and your withholding allowance for your W-2. You may both be taxed at a higher rate, so do this early on so you don’t end up owing a high tax bill at the end of the year. You may also need to adjust your budget if more money is coming out of your paycheck each month to go toward the higher tax responsibility.
5. Prepare for Future Life Events
An often neglected finance tip for newlyweds is creating a will if you haven’t done so already. You’ll want to list your spouse as the beneficiary to your assets to make sure you quickly receive those benefits in unexpected and unfortunate circumstances.
Also, review your insurance needs. See if you can combine health insurance coverage to save money, and check to see if you need life insurance coverage to make sure you or your spouse could comfortably live with your financial obligations if one of you passed away suddenly.
6. Seek Professional Help as Necessary
Some of these decisions can get heavy, especially if it’s new territory in a relationship. Don’t be afraid to get professional help, such as a financial planner or tax advisor. If one or both of you have bad credit, you can schedule a free credit repair consultation with Ovation Credit to help prepare for future financial goals.