A new marriage is an exciting time. It is also a time to look toward the future and think carefully about how you will build your lives together. All couples encounter a variety of challenges and stresses, and navigating through them tests any relationship. Stress over money matters is a common contributor to marital strife and divorce. Start your lives together with a strong financial plan, both for your own security and for the sake of marital harmony. For marriage financial planning advice in Des Moines, contact the experts at Boelman Shaw Capital Partners.
1. Find your common ground.
Consider how to structure your banking. Will you have individual accounts, a joint account, or both? Holding a joint account with regular and equitable deposits from both spouses facilitates paying joint expenses. It is also a good idea for each partner to maintain at least one individual account for personal expenses and for maintaining a somewhat independent credit history.
Decide who will be in charge of managing finances. If it is to be a joint undertaking, divide the tasks in a clear and sensible way. Having one person in charge of paying bills and keeping tabs on account balances, for example, is much more efficient than both of you trying to do the same job.
Budgeting & Saving
Do you have similar ideas about budgeting and saving? If one of you counts pennies and the other maxes the credit cards, you will have some serious negotiating to do. Talk together about your financial wants and needs, and find out where you agree. If you both want to buy a home, have a child, or even just take an annual trip to the Caribbean, start there, and consult with a financial planner about what you will need to do to make your dreams a reality. Setting common goals is a wonderful way to open communication, and it can help you reign in discretionary spending. You may also want to discuss putting a limit on purchases one spouse can make without consulting the other. Addressing this issue before it arises will help you avoid conflict down the road.
After you have agreed on a budget, do your best to stick to it. Have any agreed-upon savings contributions automatically transferred every month. It’s too easy to miss making a deposit, either because you forget or because you want the funds for something else this month, if you have to take the steps to do it yourself.
2. Develop a debt strategy.
Make sure that you are both fully aware of each other’s debts. The most effective way of paying down existing debt is to focus on debts carrying the highest rate of interest first. Even if this means devoting most of your payments to the debt of one spouse for a time, it will pay off in the long run for both of you as you will climb out of debt faster.
3. Save for retirement.
The dual income, no kids phase of your life gives you the most available cash flow you are likely to have in your lifetime, even assuming your income increases. Take advantage of this time of plenty to save as much as possible for retirement. Start making regular contributions to an IRA or 401(k). Your future selves will thank you.
Life, disability and long-term care insurance policies are much less expensive when you purchase them earlier in life. You may be young and healthy now, but age and unexpected events happen to us all. Even for a partner whose primary responsibility is caring for the home, life insurance is important. The non-financial contribution that spouse makes to the family can be costly if you need to hire others to take up the work. Ensure your family’s security by meeting with a professional to discuss appropriate levels of coverage for each of you.
5. Estate Planning
Although couples do not like to think about the end of their lives together just as they are beginning, appropriate estate planning is an important part of starting your partnership. It becomes even more important when children enter the family. The four basic documents you should have in place are a will, a living will, a power of attorney, and a healthcare power of attorney. For more information on these documents, see the post, "Key Estate Planning Documents You Should Consider."
Contact our Des Moines office for help with your marriage financial planning. Our professional staff can help you develop a plan that will start your new lives off right.
Material discussed herewith is meant for general illustration and/or informational purposes only, please note that individual situations can vary. Therefore, the information should be relied upon when coordinated with individual professionaladvice.