Don’t let finances come between you and your spouse—follow these tips to make sure you are both on the same page
Getting married is an exciting time in anyone’s life. With marriage comes a lot of change, and finances are more than likely one of them. Hopefully, by the time you and your spouse are married, you have some type of familiarity with how each other handles finances. With that being said, even if you feel like you understand your partner’s financial situation, the two of you won’t be on the same page unless you sit down for an open conversation about your financial history, habits, and goals.
After the honeymoon phase ends, you and your partner don’t want money to become a stress point for you. You need to consider the future, and also think about what you would do financially if the worst happened to one of you (especially important if you’re thinking of starting a family). Life insurance should definitely be at the top of your list of crucial insurance policies to take out.
By taking out guaranteed universal life insurance you protect those that are financially dependent on you, and help prevent financial hardship for them should you pass away. Guaranteed life insurance policies are particularly useful, as you won’t have to worry about them expiring unexpectedly as you get older. Many Life Insurance policies require a medical examination, but there are also several types of no medical exam Life Insurance, whereby you don’t need one in order to take out a policy. When it comes to no exam life insurance, it’s a great option for younger couples starting out together, young families, and very busy people, who can then get their policy set up online and stress-free, without having to find the time to get an examination carried out.
You can also follow these 8 financial tips for newlyweds to get your new financial situation under control and ensure you have a solid plan in place for financial freedom down the road. Beyond adjusting your budget, taking steps like planning for taxes, finding cheap life insurance policies, and making a plan to pay off large debts can help lay a solid foundation so you and your partner can be more financially secure together.
1. Understand Each Other’s Financial Habits and Goals
Getting to know your spouse’s financial habits will help you decide how you will handle money together
While you’ve likely grown to understand the financial habits of your significant other, if you have not had an honest conversation about how you handle financial matters and why you choose to handle them in these ways, you will not get off on the right foot when it comes time to manage your finances as a couple. If you have not had this conversation yet, now is a perfect time.
To better understand your partner and how they handle their finances, you’ll want to plan out some time to sit down and ask each other questions. Some questions you may want to ask are:
- Are you typically more frugal or do you have a habit of spending a large amount of money?
- If you do overspend, how do you recover from that?
- If you are more frugal, what do you like to put your extra money toward?
- How did your family handle their finances?
- Was money a stressful situation for your family growing up?
By taking the time to sit down and really get to know your partner’s history with money and how they handle money today, the two of you can work on a plan to handle your finances together.
2. Organize Your Finances Together
Find an organizational system that works for you and your partner so that you don’t miss paying any of your bills
Especially if you have just recently moved in together, you and your partner need to sit down and come up with an organizational system to handle your finances. Now, instead of being responsible for all of your expenses, that responsibility will more than likely be split between the two of you.
First, the two of you need to agree on how your bills should be paid. Will you split the cost of living evenly? Will you split the cost so that the person who makes the most money will pay a larger portion of the bills? Beyond just how much, you both need to decide who will handle which bills. Whether you decide to sit down together and pay all of the bills together or delegate certain bills to be paid by one person and the other person will handle the rest, come up with a plan so that you are both certain that all of your bills are being paid.
Part of the organizational process, too, is keeping a record of your payments. It may work best for you and your partner to keep a folder—whether that be on a shared online folder or an actual physical folder— of all of your bills with record on when the bill was paid. This way, both of you have access to keep track of your monthly expenses.
3. Set Financial Goals
Determine your financial priorities together so you can adjust your budget
You and your partner likely both have financial goals for yourselves. As a married couple, you should align some of these goals so you can both work toward them. Of course, it’s still good to have your own financial goals to work towards individually, but the big goals—like buying a house—can be accomplished much quicker when both of you are on the same page.
Of these goals, you should have long-term, mid-term, and short-term goals that you both agree upon. Long-term goals are the goals you will have to work towards over the course of 5+ years. This may include saving up for a downpayment on a house or paying off large debts, like student loans. Mid-term goals should be achievable within 1-5 years. These goals could be something along the lines of paying off car loans or starting to set aside money to have a baby. Short-term goals should be achievable within a year. Short-term goals could be paying off credit card debt or starting a healthy emergency fund. No matter what your own particular goals look like, setting clear, actionable goals together will ensure that you both are on the same page about what you need to accomplish financially. With your financial goals in order, you can start budgeting together as a couple with clear goals in mind.
4. Decide On Joint Or Separate Bank Accounts
Make the choice on whether your finances will be managed under a joint account or you will manage your accounts separately
After you get married, you and your spouse should decide whether or not you will keep your bank accounts completely separate, join all of your bank accounts together, or have one shared joint account while having your own separate accounts as well.
More often than not, couples tend to have a joint bank account as well as their own separate accounts. The joint bank account can be used to deposit money for shared expenses and can make paying your bills much simpler. Still keeping your own separate accounts gives each of you a level of financial freedom so that you keep your autonomy over certain parts of your financial life.
Using only a joint bank account is a nice option for couples who plan on sharing their income fairly evenly. A combined bank account gives you and your spouse financial transparency into how you both are spending your money. On top of that, a joint bank account can make budgeting a lot easier as you can see all of your income and expenses in one place. With all of this being said, only having a joint account can cause some issues within your relationship if you and your partner are not on the same page about your spending habits.
Keeping your bank accounts completely separate is a viable option, but it can make paying bills a bit more difficult. If this is your preferred situation, you and your partner will have to make a plan on how you plan to manage your finances. Typically, couples will opt to keep their accounts completely separate if one has different and higher financial obligations, potentially like a higher student loan payment or financial obligations from a previous relationship.
5. Make a Plan to Pay Off Your Debt
Paying off your debt early frees up you and your partner financially to make bigger purchases together down the road
Especially for young couples, it’s pretty common that at least one person will bring in a bit of debt to the relationship. Now, as a married couple, the two of you will need to determine how you will pay off your debts. You may decide that each person pays off their own individual debts or you will share the responsibility of all of your debt. Either way, you and your partner choose to handle your debts, you need to have a financial plan in place together so you can plan for other big expenses, like buying a house for example.
To get started on your plan to pay off your debts, sit down with your partner and list out all of the debts that you have together, and also if one of you has debts with a previous partner then it’s best to be up front. You may need to trace a person in order to sort out your previous financial affairs.
When it comes to any debt you should also detail what your payment plan looks like and how much interest the debt accrues. From here, there are a couple of different strategies you can use to start paying down your bills.
- Snowball strategy – Pay off your smallest debts first while still making at least the minimum payment on all of your other bills.
- Avalanche strategy – Pay off your debt with the highest interest rate first while still making at least the minimum payment on all of your other bills.
- Consolidation strategy – Consolidate all of your debt with one carrier at a lower interest rate.
Which strategy you opt for depends on your own financial situation. The avalanche strategy may be best if you have debts with a high-interest rate whereas a consolidation strategy may work best if you have a lot of combined debt.
6. Find Life Insurance
The best time to find an affordable life insurance policy is when you’re young and healthy
Life insurance is more than likely not something you have considered, especially if you and your spouse are young. With that being said, now may be the time to start looking for a life insurance policy. Let’s say you and your new spouse have just bought a house together. You and your spouse more than likely decided on a home price and a monthly mortgage you could afford based on both of your incomes. But, what would happen if one of you passed away earlier than expected? Would your spouse be able to afford your monthly house payments? Would they be able to afford to live if they were now living on one income? Would they be able to cover the financial costs of a funeral? If your death would put your significant other in financial hardship, then you may want to consider a life insurance policy.
While life insurance is often overlooked by young people, the best time to get a life insurance policy is actually when you are young. Most life insurance policies consider your age and your health—among other factors—to determine how much coverage you can get and at what price you can get it. As a young, healthy person, you may pay a much lower rate compared to someone who is 55 and in less-than-ideal health for the same amount of coverage.
As young people consider life insurance, they often want to find the cheapest life insurance coverage possible. After all, it can be difficult to add yet another bill to your financial plate. Out of all the life insurance options on the market, term life insurance tends to be the cheapest. This type of life insurance policy guarantees coverage for you for a specified period of time—most commonly 10, 15, 20, or 30 years. Should the policyholder pass away during the period they are covered by their insurance company, their beneficiary gets paid out the whole coverage amount. Keep in mind, though, that should coverage lapse and the policyholder passes away after the fact, the insurance company would not pay out that benefits. While there are indeed plenty of other types of life insurance to choose from, like whole life insurance, many young couples find that term life insurance gives them the coverage they want at the price they need.
7. Align Your Retirement Goals
Find a compromise in your retirement plan that works for you and your partner
At this point, you may or may not have already started investing in your retirement. However, you may not actually know what your retirement goals are. Or, on the other hand, maybe you already have a goal in mind for yourself. Either way, it’s a good idea to talk to your spouse about your plans for retirement.
It’s absolutely fine to have different goals from your spouse, and you don’t have to be on the same timeline. With that being said, the two of you may want to get on the same page about what lifestyle you want to have together.
To start this conversation with your spouse, first set your own actionable goals. Determine what age you want to be, how much money you want to have per year, and what lifestyle you want to have. You may determine that you want to live on $60,000 per year and have enough money to take a vacation at least twice a year.
Once you have your own goals in mind, sit down with your partner to talk about what you want. As mentioned earlier, you don’t have to have the exact same goals as your spouse. However, your own individual plans will determine how much money you set aside each month for your retirement fund, so you will want to find places of compromise wherever you can. As your plans and financial situation change, keep an open line of communication with your spouse on how you can prioritize your retirement plans so that both of you are happy.
8. Get Your Taxes In Order
Prepare for taxes ahead of time to avoid unnecessary headaches
As Ben Franklin once said, nothing is certain except death and taxes. Taxes are frustrating and getting married can make taxes a bit more complicated if you aren’t fully prepared. For new couples, you may get hit with what is known as the “marriage penalty.” This happens when newly married couples end up paying more in taxes than they would if they were single. Because you don’t want to find yourself caught off guard by any changes in your taxes, you and your spouse need to make a plan to file your taxes early. Here is what you need to do to prepare:
- Determine your filing status – You and your spouse will need to determine whether you are using the married filing jointly or married filing separately status. Generally speaking, it’s best to file jointly, but you may want to explore your filing status options to see which is best for your situation.
- Update your withholding – Soon after you get married, you and your spouse should fill out a new Form W-4 so that your employer can adjust the amount withheld from your salary.
- Update your name on your Social Security card – If you changed your name when you got married, you must update the Social Security Administration. If the name on your tax return does not match the name on your social security card, this will cause issues when the IRS processes your tax return. To avoid any headaches, update your name as soon as possible.
Getting married is such an exciting time in your life, and your financial situation shouldn’t take away from that. Money can be a huge pain point in relationships, but as long as you and your partner are open and honest with each other about finances, you can work together to make sure that it’s not a stressor in your marriage. By taking some financial steps as newlyweds, like getting your finances organized, finding cheap life insurance quotes, and getting your taxes in order, finances will be the least of your worries for you and your partner.
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