Marriage is an exciting stage in life that leads to changes in your life, including your finances. Your shared financial habits affect you in many ways, such as the house you can afford, whether a joint loan can be approved, and even your retirement age.
Without a plan, money can become a source of conflict in marriage. Financial matters significantly affect many other lifestyle choices, from your Netflix bill to holiday savings. After marriage, merging finances may include joint bank accounts, filing taxes together, and purchasing your first home.
1. Discussing Money Motivations
Open communication helps couples reach compromises and avoid conflicts over time. Be transparent about your financial habits with your partner and explore the roots of your philosophy in managing money. Understanding your financial motivations can shape your future interactions – without risking anger or judgment of your partner’s spending behaviors.
Some good questions to get started: How was money handled in your home growing up? Are you a spender or a saver? How much do you save each month? How have you managed money up until now? Do you use an app, spreadsheet, or something else? What is your credit score, and how important is it to you? Do you pay your credit card balance in full each month, or just the minimum? What is your investment philosophy?
2. Setting Financial Goals
Discovering new shared financial goals can make managing money more enjoyable, so write down your short-term and long-term financial goals. These might include things like buying or renovating a home, raising children, advanced education (college, graduate school, or training), starting a new business, retirement, emergency savings, and buying a significant or vacation.
For each of them, you can dive deeper as well. In your dream world, how much would you allocate for an annual vacation? Where would you go? What are your retirement plans – at what age and where? What do you envision?
Setting and prioritizing shared financial goals provides a framework for spending and saving, helping to create a roadmap for agreement. Your views on the future may differ, so you can start discussing how to make both partners happy now.
3. List of Assets and Liabilities
Partners are likely to have some assets they bring into the marriage and possibly some debt. Assets may include cars, homes, savings accounts, and investment accounts, while liabilities may consist of student loans, mortgages, or credit card bills.
Couples should accurately know what each party is bringing to the table, as debts and assets affect spending habits and qualifications for joint loans. Couples should share their individual debt amounts, discuss repayment plans, and whether they will tackle debt individually or together.
The assets you have accrued reveal your priorities and shed light on your future financial goals. For example, if your partner already has significant investments, they may be in a better position for joint retirement savings efforts. Investing may be a crucial part of your partner’s financial habits, and growing the nest egg may be their priority.
4. Merging Finances After Marriage
Should you merge your finances as a couple? In some cases, you may not have a choice, while in others, you may have options. Decide together what works for you as a couple. For example, you might have some joint accounts but also maintain separate accounts.
Bank accounts: Merging your finances can be convenient, allowing you to contribute to paying joint bills from one pool of money, rather than figuring out how to split expenses. However, this can also lead to more discussions and perhaps more conflict over how to spend money.
Cards
Credit: Some credit cards allow for joint accounts – where both spouses have the right to use the card and share responsibility for repayment. Other cards allow you to add your partner as an authorized user. You will retain control of the account and be responsible for paying the bill, but your partner will receive a card in their name or will be authorized to use your card.
Taxes: Determine whether you will file your tax return as “married filing jointly,” which may affect your income-driven student loan repayment. If you file your tax return as “married filing separately,” you may not qualify for certain income tax deductions. Your income tax rate may also change as a result of your marital status – you may encounter a higher or lower rate depending on your combined income. Speak with a tax professional to identify the best path forward.
Credit History: Upon marriage, you both have separate credit reports and credit scores, which remain separate. If your partner has unfavorable information on their credit report, it will not affect your credit score. However, any new joint obligations will appear on both reports, including mortgages, auto loans, and shared utility bills. This means that if your partner pays a joint account bill late, your credit score will be affected as well.
5. Setting a Monthly Budget
Use your defined financial goals to determine what kind of monthly budget you will use, and agree on spending limits. You will review the budget throughout your marriage, so it doesn’t have to be perfect the first time, but make sure you can track your expenses and measure the budget’s success.
Then, decide who will handle the day-to-day tasks of managing the finances and paying the bills. One person may pay the mortgage or rent while the other invests the money or writes a check or sets up direct deposit for the other bills. You might both pay for groceries.
All the money can come from one big pot, but it’s still worth discussing the responsibilities each partner will take on, and whether there will be a spending limit (like less than $50). Even if one partner pays the bills and manages the monthly finances, the other partner should stay informed and involved in financial decisions.
6. Evaluating Insurance
Buying insurance is a vital part of maturity, especially after marriage. For example, health insurance may be more expensive on your spouse’s employer plan, and you can save more by bundling your car insurance into one plan.
If you’re taking on financial obligations based on two incomes, such as buying a home or having children, an insurance policy can help cover your share of the budget if something happens to you.
An estate plan is a good idea and should include a will that specifies the distribution of assets and child custody. Having a will gives you more control over the management of your estate and can reduce or eliminate estate taxes if you have a larger estate.
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Sources: The Balance uses only high-quality sources, including peer-reviewed studies, to support the facts in our articles. Read our editorial process to learn more about how we verify facts and maintain the accuracy, reliability, and quality of our content.
U.S. Congress. “Written Testimony to the U.S. House of Representatives Committee on Services.” TurboTax Intuit. “Marriage: What Newlyweds Need to Know.”
Source: https://www.thebalancemoney.com/a-post-nuptial-financial-to-do-list-guide-for-newlyweds-1289323
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