Marriage Financial Planning – Beyond the Wedding Plans

Aug 14, 2014 12:21:31 PM / by Jason Shaw

Many couples decide to get married without giving a lot of thought to financial planning. If your love is strong, you can figure out these little details, right?  Maybe, but by taking the time and energy to talk about your financial life together before the wedding day, you are giving yourselves a much better chance of marital harmony in the coming years.  If you and your betrothed have different attitudes, values, habits, and goals around money, it is much better to find this out now than after you have joined your financial destinies.

 

What are your financial priorities?

Discuss what you both would like to get out of your money.  Do you hope to buy a home, have children, or save for education or retirement expenses?  Do you want to travel, purchase luxury items, or have a large entertainment budget?  Talk about your priorities so you can plan to accommodate them.  If you find out that your priorities are very different, look for compromises that will give you each enough of what you consider important.

 

How will you structure your finances?

Intermingling

Consider how much you want to integrate your finances.  Are there some assets that you will want to keep separate?  Understand how marital property law works in your state so you know how your marriage will affect what belongs to you, your partner, and both of you.

Banking and Expenses

Will you have a joint bank account, separate accounts, or both?  If you have separate accounts, for which expenses will each spouse be responsible?  Will you share both of your incomes equally, or will you each manage what you earn individually?  If you have a joint account, what types of expenses are okay to incur without consulting your spouse?  The “better to ask forgiveness than permission” approach may get one of you something you want, but won’t foster matrimonial bliss.

Budgeting

After discussing your financial priorities, you should have a firm basis on which to build a budget.  Decide how much you need for basic expenses, such as housing, food, transportation, utilities, etc., and divide what is left over among savings, investment, and discretionary spending.  LearnVest suggests a 50/20/30 rule, allocating no more than 50% of your income to essential expenses, 20% to saving for the future, and 30% to whatever you like, but your own priorities and individual financial situation will determine the right allocation for you.  An independent, professional financial advisor can help you work out a plan that serves your goals.

Credit

If one or both of you already has debt, you need to talk about how much debt each of you has and how it will be paid off.  You will also need to talk about when, how, and under what circumstances you will use credit.  Two people can have very different attitudes about the use of credit, and these differences can put a great deal of stress on a marriage.  Do yourselves the favor of working out a credit usage policy ahead of time so it doesn’t become an in-the-moment argument down the road.  Share your credit scores with each other so you have some understanding of your ability to obtain credit as a couple, especially if you intend to purchase a home together.

 

How will you prepare for the unexpected?

Insurance

Talk about what types insurance policies you will carry and what level of coverage is appropriate for you.  Couples with children have a particularly high need for life insurance, even for a non-earning spouse.  An independent insurance professional can compare your needs with a variety of products to help you find a cost-effective way to manage your risk.

Emergency Fund

If you don’t yet have at least 3-6 months worth of earnings in savings, then start building your emergency fund.  Having this buffer in the bank helps to smooth out the bumps caused by unexpected expenses or interruptions in income.

 

Marriage financial planning is one of our specialties.  Contact Boelman Shaw for a free consultation, and we will help you get off to a great start.

Material discussed herein is meant for general illustration and/or informational purposes only.  Because individual situations will vary, the information shared here should be used in conjunction with individual professional advice.

Topics: Uncategorized

Written by Jason Shaw