Getting married is hard work – drafting a guest list, picking a band, paring the guest list, finding a venue, expanding the guest list, hiring a caterer, paring the guest list. Then you have to write all the thank-you notes.
But it’s not until you hear “…pronounce you husband and wife” that the real work begins. Now you have to organize your finances.
Start by having the talk. Many people are much more willing to discuss sex than money. Sit down and talk about financial goals – house, kids, college, and retirement. Share your credit history – that will shape your course of action.
Some of the things you should do after the honeymoon – if not before the ceremony itself.
- Decide on your checking accounts. There is a lot to be said for the “we’re in this together” aspect of a joint checking account. Having a single checking account has other advantages such as easier record keeping and lower maintenance fees. Just make sure to share who is spending what.
- Draft a budget. Putting pencil to paper to list income and expenses, and prioritizing where the money goes is a basic tenant of financial planning. There are many help worksheets available. It’s also an important first step many overlook. Start your marriage off right.
- Manage debt. Each person will bring a different amount of debt to the marriage. This can be the “for better or worse” part of the marriage. If one of you has bad credit, it can negatively impact the credit rating of the other. You may want to have one spouse added as an authorized user to the other’s account. Come up with a hard-core plan to whittle down debt, if necessary. That’s were drafting a household budget plays a key role.
- Investigate insurance options. This may be the time to pool automobile insurance coverage – many companies give multi-car discounts. Crunch the numbers on the spouse joining the other’s company health insurance plan versus keeping individual coverage.
- Coordinate retirement planning. Look at your two retirement savings plans as one pot of money. Perhaps one 401(k) has better stock options and the other has better bond options. You get your diversified mix of assets by combining the two accounts. Contribute as much as you can to the plans – at least enough to get any company match.
- Think way, way ahead. You just got together so it may be grim to think about preparing for what happens when one of you goes, but it’s part of being an adult. Yes, have a will prepared. But also make sure you change beneficiary designations on retirement plans and insurance policies. Otherwise, your 401(k) balance will go to your parents or siblings or nephews. No matter what the will says.