You’re getting married, which means you have a lot do before saying I Do. While it may not sound very romantic, one of the most important things a couple can do prior to taking their vows is discussing how they’re going to manage their finances.
Starting the Conversation
Ask your fiancé if you have any financial habits or burdens that might be of concern. These could range from major student debt to a minor fondness for eating out. Let your future partner say everything that’s on his or her mind without interrupting or being defensive. Then ask if you can express some of your concerns if you have any.
Some couples take this conversation to another level by obtaining and discussing their credit reports. Caution: Rather than treating a bad credit report as a deal breaker, use this opportunity to plan a strategy for raising either or both of your scores early in the marriage. You’ll be glad you did when it’s time to buy your first home!
Will You Share Bank Accounts?
Getting married means learning to share your life with another person, including your financial life. Some couples choose to keep their accounts separate just as they did before the wedding. Others might maintain one joint savings account, but keep individual checking accounts. Still others dive right in by pooling their financial resources completely. From a financial standpoint any of these approaches is acceptable, so your decision might depend more on your attitudes about privacy, independence and trust.
Joint or Separate Returns?
Most married couples benefit by filing a joint tax return, especially if one of the spouses earns significantly less than the other. This difference can result in the higher earner being pulled down to a lower tax bracket. On the other hand, filing separately might be a good idea if you or your spouse can claim miscellaneous deductions that add up to more than 2% of your adjusted gross income. If you’re not sure whether to file jointly or separately, many tax preparation software packages will run the numbers for you both ways—making it easy to decide which tax strategy is best for you.
Change Your Beneficiaries
As you’re changing your name on government documents such as social security cards, remember to change your beneficiary on IRAs, 401(k) accounts and insurance policies. Most people want these funds to go to their spouses in the event of death, so update your beneficiaries as soon as you get married to help avoid legal battles down the road.
Planning a financial future together? The First’s Trust & Wealth Department can help.
While You’re on the Subject…
Before you walk down the aisle, talk about which one of you will be walking down the grocery aisle. This and dozens of other decisions like it should be made in advance. For example, who will pay which bills? Is one of you going to be the designated saver? And how much of a personal allowance do you each need per month? Financial issues are one of the most common reasons couples divorce, so discussing the subject ahead of time is a good way to ensure a happy and prosperous marriage.
Did you know the more you spend on your wedding, the more likely you are to get divorced? http://www.pbs.org/newshour/updates/spending-less-wedding-save-marriage
What is the ideal amount to spend on a wedding or engagement ring? Let us know what you think in the Comments.