The months after a wedding can be an exciting and euphoric time. But they can also feel strangely unstructured after the whirlwind of activity that preceded them. It’s not uncommon for newlyweds to find themselves wondering, “Now what?” As newlyweds go through the post-wedding transition, they may find this period is an ideal time to make important decisions about marriage and finances, and, also, how to manage the household going forward. Pre-wedding and post-wedding finances can be drastically different. So, while marriage and money should be one of the major things to discuss before marriage, it is also a topic that should be revisited periodically after the wedding.
Combining finances
There’s no one-size-fits-all approach when it comes to sharing money as a couple. Some people find it easiest to merge their finances completely, some prefer to keep their finances separate, and others take a “yours, mine, ours” approach with joint accounts for shared expenses and individual accounts for everything else. It can become even more complex when kids are brought into a marriage—or if there are existing assets, like a home or a business. The solutions couples come up with should be based on their unique situation, personalities, relationship with money, and shared financial goals. All of these can change over time, but they are important topics for conversations to have before marriage. Treat the first move toward merging finances as the beginning of an ongoing discussion. If pre-marriage debt, savings, and assets are being combined, one should have the right legal and professional guidance right from the start.
Create a budget to pay off wedding-related debt.
A lot of newlyweds take on debt from their wedding, as well as from their honeymoon. Paying it off should be the first item on a post-wedding to-do list. Most couples likely want to go into marriage with plans to save for a home or eventually have children, but debt from wedding expenses will interfere with those plans. Don’t just resolve to pay off the debt. Draw up an actual payment plan with a realistic schedule for making debt go away. This should be done proactively, but do not sacrifice other long-term savings efforts. Both should continue to contribute to retirement funds and should keep up insurance coverage.
Use cash gifts wisely.
If cash gifts are received for the wedding, figure out how best to put that money to work. What are the immediate and long-term financial goals? Decide whether it makes more sense to use that money to pay down debt, to save for a specific goal, or to do a combination of the two. Maybe a couple will want to use cash gifts to start saving for a down payment on a home, to arrange appropriate life insurance coverage, or to add to retirement savings.
Update your insurance coverage.
Getting married is a major milestone in life—one that should prompt a couple to update beneficiaries on retirement accounts and life insurance policies, and to reexamine life insurance coverage to make sure both are carrying the right amount. If a spouse becomes the beneficiary, they will be protected from financial burdens like outstanding mortgage payments or the loss of salary if one passes away prematurely. We have solutions that provide protection with a guaranteed life insurance benefit as long as premiums are paid when due and that also have a long-term accumulation component. For example, a whole life policy has a cash value that can ultimately be used to supplement retirement as protection needs change. It may also pay dividends to provide further growth. (Dividends are not guaranteed) The right policy enables a couple to prepare for whatever lies ahead.
Get professional guidance.
Marriage changes many details of financial life, including the way taxes are paid. Therefore, it’s worth taking the time to talk to an accountant before tax season to learn how things like “married filing jointly” can affect taxes and earnings. A financial professional can help with the bigger, long-term goals, such as how to fund retirement and save for educational costs if there are children or a plan to have them. Get started now and begin marriage on a secure financial footing.