Getting married? Here are the most important financial points to consider.
So you’re getting married — congratulations! This is an exciting time that brings many life changes, not the least of which will be financial in nature. There are myriad steps to take and issues to consider when two become one. Here’s an FAQ that you can use to make the best possible decisions for your own situation, lifestyle and union:
What should we talk about before the wedding?
Be open and honest about your respective finances and how they will be intertwined. Student loan balances, monthly bills, prenuptial agreements, insurance coverage and other financial matters should be brought out into the open. Address any pressing issues (an unpaid credit card balance or a poor credit score, for example) and work together to come up with a plan of action for tackling those problems. A financial adviser, accountant or even a parent can help with any particularly sticky issues.
Do I have to tell him or her everything?
By starting your union with a fresh, honest slate, you’ll be able to ward off challenges down the road. It may be uncomfortable to share so much with another at first (particularly if you come from a family that doesn’t discuss money), so start with small, digestible chunks and work your way up from there. The effort will pay off.
What’s an easy first step in that direction?
Develop a budget for your new, two-person household. Jot down all of your monthly obligations and income and figure out exactly what will be flowing in and out of your bank account(s) on a monthly basis. Decide whether you will combine all of your money in a single account, or if you’re going to keep separate accounts (and set up a third for bill-paying), and who will be responsible for writing checks for monthly, quarterly and annual bills. This simple exercise will help you avoid one of the two main issues that couples argue about on a regular basis – money (the other one is children).
How should we handle our tax returns?
In most cases, you will begin filing joint tax returns for the year that you tied the knot. Be sure to adjust the withholding from your paychecks as soon as you’re married. Use the instructions for Form W-4 or consult IRS Publication 919: How Do I Adjust My Tax Withholding? to determine how many withholding allowances you should be claiming. Divide those allowances between yourself and your spouse, recognizing that each allowance is worth more (in terms of reduced withholding and more take-home pay) to the higher earner.
How can marriage positively impact our finances?
You’ll gain earning power, combine expenses under a single roof and have a “wingman” to help you make important financial decisions. Cell phone bills (now on combined plans), mortgage payments (you only need one now) and insurance coverage (typically cheaper when you are married) are just a few of the areas where you’ll be able to save money. And, by working as a team to set up and fund savings plans, retirement plans and other long-term options, you’ll be able to build a solid future for yourselves.
This article has been prepared for informational purposes only. The accuracy and completeness of this information is not guaranteed and is subject to change. Since each individual’s financial situation is unique, you need to review your financial objectives to determine which approaches might work best for you.
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