Weddings are very memorable events - full of anticipation and lots of planning. Once you decide to get married, there is one type of planning that many people overlook – financial planning. Even if you wait to discuss financial planning after the wedding, it is still very important that you get an understanding of your spouse's spending habits and how he or she looks at their financial obligations.
Spender or saver?
If you or your spouse liked to indulge before the wedding, you will probably do the same after the vows have been said. It is good to discuss your views on finances early on to avoid surprises. If you are a serious spendthrift these differences in attitude about money need to be addressed ahead of time, so that hopefully a compromise can be reached. Among the top three most cited reasons for divorce are money issues or arguments, and many times financial planning before (or early in) a marriage can resolve the largest disputes.
Put all of your respective financial obligations on the table
It is important to disclose to each other everything there is to know about your individual, respective financial situations. Be honest about your income, debts, and pre-existing financial issues. Also, do not overlook any existing financial obligations to an ex-spouse or children from a prior marriage or relationship. A marriage should be about honesty, which includes honesty about your financial situation, even if your financial situation may not be pretty.
Who is responsible for what?
Some couples decide right off that everything will be split down the middle, including both income and financial obligations. Others divide the bills between themselves. Whatever arrangement you decide to make, it should be established as soon as possible to prevent any confusion. If you have separate accounts, know which account pays which bill. Also, remember to notify creditors of your any name changes, new addresses, or account changes.
Discuss future goals and realistic expectations
As newlyweds, you will no doubt find yourself sharing your dreams and expectations regarding your new life together. By evaluating your financial situation early on, it will be easier to define your goals as a couple. Some questions to discuss should include whether to purchase a home, start a family, and which large debts you want to pay off first. Thinking long-term, you might also begin discussing work and home responsibilities, and how you plan to save money towards retirement. At this point, putting together a budget and working with a financial planner may help achieve your goals.
Separate or joint bank accounts?
Couples should discuss their preferences with regard to their bank accounts. There can be advantages and disadvantages to having joint accounts or separate accounts. Establishing a joint account could mean fewer fees and less complication, but money put into a joint account will be co-mingled and considered marital assets. Keeping your bank accounts separate can be easier for those who are already used to managing their own finances, but can add some difficulty in dividing income, bills, and expenses. Some couples find that a combination of joint and separate accounts works well, too. For instance, you can have a joint account for shared household expenses and separate accounts for personal spending.
How to handle insurance coverage
When it comes to health insurance, most couples already have their own policies when they marry. The best advice is to perform a cost/benefit analysis for both plans, to determine which policy is the best. You may also consider whether you need a family plan, or whether it would be more cost effective to maintain two individual plans. When looking at insurance policies, also consider whether one spouse plans to move jobs, which may cause problems if you use the former employer's insurance. As far as auto insurance, you may be better off consolidating your auto policies. Another insurance issue newlyweds should consider is life and disability income insurance. Many couples want the peace of mind that these types of policies can provide, ensuring that one spouse will be able to make ends meet without the other in case of unexpected illness or disability.
If you have questions regarding marriage issues, or any other financial planning needs, please contact Anderson, Dorn & Rader, Ltd., either online or by calling us at (775) 823-9455.