According to a recent study, money causes couples about five fights per year. Therefore, if you can take the financial stress out of the equation, it will make it that much easier to get your marriage off on the right foot. Here is a checklist of things you can do before your wedding, after your wedding, and in the future to keep your finances in check:
Before the wedding
1. Discuss your financial goals
People are getting married later in life, thus they come to the marriage with more complicated financial baggage. One may have credit card debt, student loan debt, or may simply have had experiences that helped them shape how they deal with money and that they would like to share with their new spouse. It’s important to sit down with your fiance and discuss these things because while you may not agree on everything, at least you will gain an understanding of where the other person is coming from.
2. Review your credit histories
The next thing you should do is swap credit report and take a look at each other’s financial standing. Things like a bankruptcy in your partner’s credit history can affect his or her credit for many years to come, and can be a huge burden on you as a couple. Therefore, it’s important for you to know what you are getting into.
3. Talk about spending
Your wedding and honeymoon will probably the first big thing that you and your fiance will spend money on as a couple. Do you really want to put yourself in debt just to have a nice wedding? There is no evidence that the more you spend on a wedding, the more successful your marriage will be. So, it’s important to find the right balance between the kind of wedding you want and protecting your financial future. Furthermore, this will be the first exercise in working together as a couple.
4. Write financial vows
If you are going to write vows about how you intend to live your lives together, it’s also important to come up with some financial vows together. How are financial decisions going to be made? How will you deal with each other as far as money goes? What financial ideas and theories do you share in regards to dealing with money?
After the wedding
1. Update important documents
After the wedding, you want to make sure that you update or create important documents such as wills, trusts, power of attorneys, etc. If you are getting married for the first time, you may not have these documents at all. So, you will need to create them. If you have been married previously, you need to update these documents to reflect the changes that have taken place in your lives.
2. Review your beneficiary designations
Reviewing your beneficiary designations is very important because if something happens to you, how your assets pass to your spouse may not be as straightforward as you think.
For example, your spouse is automatically the primary beneficiary of your 401k at work. But with your IRA account, your spouse is not. So, you want to be sure that you have those beneficiaries properly listed.
This is especially important as it concerns assets such as property, jewelry, artwork, etc. These can easily get tied up in probate if not properly titled. You may want to hold these types of assets in a trust, so that you can specify how you want them to be transferred.
3. Diversify your investments
If you and your spouse both work for the same company, you may have both your portfolios tied up in company stock. In this case, it may be a good idea to think about both of your portfolios as a whole and find ways to diversify, so that you don’t have too much tied up in one place.
4. Establish good records keeping
It’s important that each of you know where your important financial documents are kept and that each of you knows the names and how to get in contact with your financial advisors, should something unfortunate happen.
For the future
1. Start an emergency fund
The biggest cause of financial stress is unexpected emergencies. Be it health emergencies or something in your house, such as the fridge going out, boiler trouble, or plumbing that has gone bad, these often cause couples to incur a great deal of credit card debt. Start an emergency fund so that you have at least a couple of months of living expenses in case something happens.
2. Make sure you are properly insured
Make sure you have proper health insurance, life insurance, and disability insurance. You may also want to think about long-term care insurance if there is any sort of disease or debilitating conditions that are hereditary in your family.
3. Decide how you want to be taxed
Decide if you want to be taxed jointly or individually. If you are worried about your spouse’s ability to pay their taxes, or if they have some complicated tax issues going on, you may want to file separately so that you don’t incur his or her tax liabilities.
4. Don’t give in to pressures at home
Lastly, try not to succumb to the pressure that your friends and families may put on you to rush out and buy a big house, a nice car, or to start a family. If you do these things before you are financially ready, you will be incorporating a lot more stress into your marriage than you need. But, if you wait until you are ready, you will be much better off.