Congratulations! The first few months of marriage are an exciting time. They’re also a time of change and adjustment. The better prepared you are, the easier the adjustment will be.
One of the biggest changes is that you’re now managing money as a married couple. What that means exactly is up to you and your spouse to decide. What’s universal, though, is how being on the same page about money affects the success of your marriage. Time and again, research shows that one of the leading causes of disagreements–and divorce–among married couples is money and finances.
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Talking about money together and making sound financial decisions may not be exciting, but it’s important for having a happy marriage. And that’s the goal, right? To help with this, we’ve compiled a list of the 10 most important financial items for newly married couples to cross off their to-do list.
1. Update all the Things
We’re not going to sugarcoat it. After you get married, you’ll probably have to update a lot of documents and accounts. It’s not fun, but it’s worth it.
- The Name Game: If you’re changing your name, you’re going to need to alert pretty much everyone: The Social Security Administration, the DMV (sigh), your landlord or mortgage company, your doctor, the registrar of voters…As a rule of thumb, anyone you have a membership or account with, you’ll want to contact.
- A Taxing Change: You may want to change the withholding allowances you claim on your W-4 to avoid owing (more) in taxes if you’re filing jointly for the first time.
- Putting the ‘U’ in Insurance: Did you have a life insurance policy before you were married? You may want to update the beneficiaries if your spouse wasn’t named in the policy when you purchased it, or if you have a step-child now.
- Merge Ahead: If you’re planning to merge your finances, you’ll need to add each other to any financial accounts you have – bank accounts, retirement accounts, credit cards, etc. There is no right or wrong way to merge your finances. Here are a couple of approaches.
- Insure All Your Stuff: You’ll need to update and combine your homeowners and renters insurance coverage if you still have two separate policies.
2. Talk About Money
You should have a candid discussion about your finances. The sooner you talk about what you want money to be like in your marriage, the easier it’ll be to get on the same page, and the better off you’ll be.
- Come Clean: Disclose your debts to your partner and vice versa. It will feel good for each of you to get this off your chest and know where you stand. Have a discussion about how you would like to prioritize debt repayment, and try not to be judgmental about the debt your spouse is bringing into the relationship.
- Goals, Roles and Priorities: How do you want to manage your finances? Who is responsible for what? What’s a bigger priority, paying down debt or saving money? What are you saving for (more on this later)? These are questions that you and your spouse will need to answer together. Speaking of which, Together™ is a free web-based tool that can help with this.
3. Pay Off Debt
Hope is wonderful, but hope is not a strategy. If you want to reduce your debt, you need a plan – one that works for both of you. Here’s how one married couple paid off $25,000 in student loan debt.
One factor that can complicate paying off debt as a couple is if that debt was accrued by one of you before you were married. Remember: your spouse’s reduced debt benefits you too. You’re married now – a unit, a team, a package deal.
4. Benefits Smackdown: Your Plan vs. Your Spouse’s Plan
If you both have jobs with benefits like health, dental and vision insurance, examine the deductibles, premiums and what’s covered for each of your plans. Also look at how much each of your plans cost for a single person versus a married couple before deciding who gets added to whose benefits.
If you’re both eligible for benefits through work, health, dental and vision insurance are just part of a larger insurance and benefits picture that includes:
- Disability insurance
- Life insurance
- Flexible Spending Accounts/Health Spending Accounts
- Retirement Savings Accounts (we’ll discuss these more later)
Be sure to consider your needs in all of these areas, what your benefit plans offer and of course, the total cost.
5. Shop for Insurance (Again?)
Wait, don’t stop reading! Insurance is boring, but there’s good news. Marriage can significantly lower your insurance rates.
- Car Insurance: Married couples are less likely to get into accidents than single people, other things being equal.1 So, most car insurance companies will charge a pair of married drivers less than they would for the same pair of drivers as individuals. Cha-ching! Plus, most insurers offer a multi-car discount that can reduce your car insurance premiums by around 10%.
- Life Insurance: If you don’t have life insurance, you should seriously consider it, especially if you have a mortgage. You wouldn’t want one of you to be stuck paying off a mortgage by yourself if something happened to your spouse. If you do have life insurance, right on! Just make sure the beneficiaries in the policy are still current and you have adequate coverage.
6. Save Your Money
First and foremost, you should have at least $1,000 saved for an emergency like a car breakdown, unexpected medical bills or home repairs. Ideally, you should shoot for having emergency savings equivalent to 3 months’ worth of expenses saved up.
After you have your emergency savings in place, your savings goals are just another decision you need to make as a couple. And once you agree on your goals, you’ll need to prioritize them. How much do you earmark for saving each month versus paying down debt? These are some big questions that may require some real thought as well as some compromises.
Once you answer these questions, it’s time to consider the actual mechanics of saving. You should think about automating your savings by transferring money automatically from your checking account to your savings account every month. You won’t have to think about it and it makes it more likely that you’ll keep saving.
7. Plan for Retirement
“Saving for retirement? We just got married!”, you might say. Well, the sooner you start saving for retirement, the more you can save up and the better your retirement can be. You don’t need to have it all figured out now, but you should get started, if you haven’t already.
Let’s begin with your 401(k) account options. The first thing to look at is the matching contribution from your employer. Most employers will match the 401(k) contributions by their employees up to a certain percentage. You may have looked at this already when you compared your benefits. If possible, you should both contribute enough to your 401(k) to max out your employer’s matching contribution. If you or your spouse work in the public sector, you likely have a 403(b) account rather than a 401(k), but they function very similarly.
You should also consider opening an Individual Retirement Account (IRA) in addition to your employer-provided account (or instead of it, if your employer doesn’t offer one). Many financial advisors recommend a Roth IRA because there’s a tax break on money withdrawn from the account during your retirement.
How much should you save? There is no hard and fast rule. It depends on your individual circumstances. The important thing is to start saving, keep saving and agree on why you’re saving.
8. Build Your Budget
Once you’ve had the money talk and gotten on the same page about debt and saving, you can work together to build a budget. Some couples prefer the old-fashioned way with a spreadsheet and pen, others prefer using budgeting apps. Play around with different methods to see which will work best for you!
Now that you’re married, your expenses may be quite different than they were when you were dating. You might have fewer fancy date nights and more “Netflix and Chill” nights. You may have new income sources, some reduced expenses and some other increased expenses. Be sure that your married budget accounts for these differences and doesn’t just carry over your previous budget(s) with no changes. That is, unless your finances truly haven’t changed at all.
We can’t overemphasize the importance of creating a budget and doing it together. Your budget has to belong to both of you and reflect both your goals, priorities and needs.
9. See Money in all Five Dimensions
Most people and most financial commentators view money as a practical consideration – a math problem to solve. Save X% of your income and keep your debt level below $X and you’re good!
The reality is that there is a lot more to money. In our research, we’ve learned that there are five ways that money influences people. We call these the Five Dimensions of Money:
- Cultural: How your upbringing, racial/ethnic, regional, and socio-economic background influences your views on money
- Spiritual: How your faith, values and convictions shape your views on money
- Emotional: How you ‘feel’ about money
- Behavioral: Your habits and actions toward money
- Practical: How facts, tools and resources influence how you manage money
If you only think about money as a practical matter, you will miss all the other factors that influence how we think about and use money. Knowledge is power to help you create better money habits – and understand where your spouse is coming from!
10. Have Money Dates
Once you address these issues, you don’t ever have to talk about money again! Just kidding. You should check in with each other about money on a regular basis. Seriously. You could have a “Money Date” night every month and talk about how things are going, share concerns and ask questions.
Whether you use this Money Date idea or not, keeping the lines of communication open cannot be overemphasized. If you have concerns, share your feelings with your spouse! Here are 3 more tips for discussing money in marriage.