Happily Ever After: 5 Financial Planning "Do's" For Newlyweds
The wedding is over, and it's time for the happily ever after. But once you have unpacked the wedding gifts and written the thank you notes, you probably need to sit down for a serious financial discussion that is considerably less fun. While you probably discussed finances to some extent before tying the knot, now it's time to get into the nitty gritty details.
If you're a HENRY, (High Earner, Not Rich Yet) here are a few financial housekeeping chores to start your marriage off on the right foot.
Tweak Your Tax Withholdings
One of the first financial tasks you may want to do as a married couple is adjust the tax withholdings that you and your spouse claim on your W-4. Remember that you don't want to over-withhold (receiving a large tax refund) or under-withhold (having to pay the IRS taxes in April). The IRS website is a good place to start if you need help in deciding what withholdings you should take to balance the numbers (of course, your financial planner can also help!).
Yours, Mine, and Ours
Next, you'll want to take some time to discuss how you'll handle banking matters moving forward. You might consider adding one another to your existing bank accounts or opening a new joint account. You'll also need to decide how much you'll deposit from each of your paychecks into these accounts to pay the bills. You may want to keep separate bank accounts for your own personal spending, but having at least one shared account is often a good idea. That way, in the case of an emergency, your spouse can pay bills and manage money as needed.
It also might be a good idea to decide which bank accounts and credit cards have the best terms and close any other accounts. Check into how closing credit card accounts can impact your FICO score before you close them out. Just keep in mind that opening joint credit card accounts means that both spouses are responsible for whatever financial mistakes the other one might make, so be wise before opening joint accounts.
Set Financial Goals
You and your new spouse should have a serious discussion about the financial goals you both have for the future. This should include things like planning for debt reduction, saving for retirement, creating an emergency fund, and saving for large expenses like a car or house. Outline a one-, five-, and ten-year plan, but remember to keep these goals flexible as things will almost certainly change. Meeting with a financial advisor who specializes in working with families to establish long-term financial plans can greatly help you and your spouse ask the right questions, get on the same page, and consider your options.
Plan a Budget
Budgets can actually help you and your spouse avoid money arguments by planning where every dollar will go before the month even starts. Don't forget to plan for expenses, savings, and possibly a little discretionary cash for each partner to enjoy. Make sure both partners have an equal say in the discussion, and be willing to compromise. That's what marriage is about, after all!
Have a Monthly Budget Meeting
Early in a marriage is the best time to start having a monthly budget meeting. During the first year, schedule a discussion with a financial planner to help you both solidify the best ways of handling finances. At this meeting, you both can discuss which bills need to be paid next, where the budget needs to be tweaked, tax implications, and how future plans need to change. This is a great habit to get into so that both spouses are aware of how much money is available and what needs to be paid for in the near future.
While there is no one "right" way to handle your finances in marriage, one thing is for sure - you need to have open communication and an overall plan that both parties are aware of and happy with. These two factors will greatly reduce financial stress on your marriage.
If you're just getting started with the "I do's" Download our free checklist!