In the hustle and bustle that comes with planning a wedding and preparing to start a life together, couples often neglect to have serious conversations about their future household’s finances. Even adults who have been living together for years can be unprepared for the ways marriage changes your feelings of financial independence and how you and your spouse both relate to money.
Don’t wait until after the honeymoon to have these four important financial discussions.
1. What are our financial histories?
Couples who are ready to say "I do" probably have a basic understanding of how each partner manages money. But do you know your partner's risk tolerance when it comes to investments? How much household debt is your partner comfortable with? Are you planning on having children? How much financial support do you want to give them when college rolls around?
And more importantly, why does your partner feel the way he or she feels about money issues?
We all have stories, often from childhood, that influence how we think about money as adults. Sharing these stories with your spouse-to-be and understanding the money experiences you're both bringing into the marriage will help you to face the major decisions ahead together.
2. How should we structure our household finances?
To combine, or not to combine? That's one of the first money decisions facing newlyweds.
If both spouses work, maintaining separate bank accounts can make things like managing direct deposits and collecting individual info at tax time a little easier. Some working couples also assign different household budget items to each spouse and agree to treat whatever's left over as discretionary income.
On the other hand, many couples feel like joint bank accounts help keep both partners on the same financial page. Seeing money move in and out of the same accounts every month can also prevent any misunderstandings about household cashflow that could lead to bad surprises and major disagreements further down the road.
3. How should we update our beneficiaries and estate plan?
One area where spouses' finances should intermingle is their beneficiary designations. In most cases, bank accounts, investment accounts, retirement accounts, and insurance policies should all list your spouse as the first beneficiary, and vice versa.
Likewise, every married couple should have an estate plan that includes, at a minimum:
- Last Will and Testament outlining your last wishes and how you want your estate distributed to heirs.
- Power of Attorney authorizing someone to act on your behalf if you're incapacitated.
- Healthcare Directive explaining how each of you want to be cared for if you are incapacitated.
- Living Will designating someone to make health care decisions for you if you're unable.
Again, in most cases, you and your spouse will want to be each other's first beneficiaries and designees for power of attorney. You might want to add a second designee in case you are both incapacitated.
Finally, make a habit of reviewing your estate plan together every year. None of these documents are set in stone, and they can all be updated should either of your wishes change over time.
4. How will we share financial responsibility?
We understand that not everyone loves to dig into their financial planning. That's a big reason why many married couples let one spouse handle the money side of the relationship.
However, in our experience, couples who work together on their financial goals are happier with their long-term outcomes. And while no one wants to think about worst cast scenarios at the beginning of a marriage, both spouses need to be able to assume responsibility for the household's finances in the event that one spouse is no longer able to.
We hope that when the wedding excitement has died down, you'll schedule some time to talk to one of our advisors together. Your honeymoon may be over, but our planning process can help provide for many more incredible experiences in the years to come.