Getting married is a significant life change that offers a lot of new challenges. It probably goes without saying, but money is one of the hot-button issues in any marriage. Two people never have identical outlooks on money and reconciling those differences can lead to some nasty arguments. So it is in your best interest to tackle these key issues as soon as you get married, or even just before if you can. It will pave the way for a smoother relationship for many years.
Not only does money tend to cause friction in a marriage, but it also changes your priorities. A married couple receives tax benefits, new banking options, possible insurance changes, and most likely, the prospect of looking out for dependents. This is a huge shift in priorities compared to being single, so if you plan ahead you can make sure you’re taking advantage of all the new opportunities available to you now that you’re married. Here are some of the first discussions you should be having with your partner in a new marriage.
The first discussion about insurance
Marriage presents a unique opportunity when it comes to insurance. If each person in the relationship has a job with benefits, youâll have a decision to make regarding who supplies the coverage. Insurance plans offered by employers vary greatly, so it is important to go over the details of each plan to ensure you are able to find appropriate coverage at the best price. While health insurance is important, newlyweds also need to seriously consider life insurance. You want to make sure that if something unexpected happens to one of you, the survivor will have sufficient financial resources going forward. And don’t forget about the kids. ManyÂ newlywedsÂ may wait a few years before having children, but insurance premiums go up as you age. So if children are almost a certainty it can pay to pick up that term policy early.
The first discussion about making up a budget
Money can be an uncomfortable topic that often leads to disagreements. One way to achieve financial peace in your marriage is to create a budget together. It isnât very often that both of you will have identical views regarding money, so the process of creating a budget can help you both understand what is important and how to allocate your resources. Start with the basicsâ’housing, groceries, utilities, and other mandatory expensesâ’then open the discussion for discretionary funds. If you’re on the same page with managing everyday expenses there are fewer opportunities for surprises that will start a fight.
The first discussion about how you’ll arrange checking, savings and credit cards in both joint and separate accounts
Should you maintain separate bank accounts, or set up joint accounts? Most couples have a mix of joint and individual accounts. Joint accounts work well for combined expenses such as paying the mortgage and other expenses. Individual accounts can be used to keep your individual spending money set aside so you donât have to worry about taking money away from more important expenses. Simplicity is the key here. You want to have flexibility with a few different account types, but you donât want to make keeping track of your money a chore. If you are looking to open checking or savings accounts be sure to get one of the best bank accounts you can.
The first discussion about drawing up, or changing, your wills
As newlyweds, you might be wondering what would happen to your assets if something were to happen to one of you. This is where creating a will can keep a bad situation from getting worse. Death is never an easy topic to discuss, but as you build a life together you need to make sure that if something does happen that your last wishes are carried out. A will is a simple document that doesnât have to cost very much or take long to complete, but it is extremely important. Without a will your survivors will be put through the nightmare of going through probate and deciding who gets what.
The first discussion about credit card debt
When it comes to credit card debt, honesty is the best policy. From the beginning, you and your partner need to be up-front about your debt. What used to be just an individual issue now becomes a joint issue, so you need to have a clear idea of where you stand. It can be a nasty surprise if you go to buy a new vehicle or a home and find out your spouse has a credit score of 520 and $30,000 of debt you never knew about. You can avoid future fights about credit card debt if you address the issue from the beginning and then incorporate the debt into your budget and financial planning. Going forward, you should also discuss how credit card purchases should be made, if at all. And if one of you does have a credit problem you can now work together to improve your credit scores.
The first discussion about your different income levels (Have vs. Have Not)
Who makes more money? Does it matter? It shouldnât. Unless each of you have exactly the same job, it is nearly impossible to think youâll be at the same exact income level. You also want to stop thinking about income as simply the size of a paycheck, and instead, think of the total compensation. This means you should take into account various insurance benefits, vacation time, retirement plans, and so on. What youâll often find is that while one personâs actual net income might be lower, they may actually be receiving other benefits that donât directly translate into a dollar amount deposited into the bank every two weeks. Some couples can be competitive and may want to earn more than the other, but this is a petty argument.
The first discussion about retirement
Retirement is often the elephant in the room nobody wants to talk about. Especially young couples. Retirement always seems so distant and that there’s plenty of time to worry about it later, but that simply isn’t true. The best thing a new couple can do is address retirement right from the start and start working together to reach that goal. You don’t have to agree to the ideal retirement as soon as you tie the knot, but you should have an understanding of where you want to be in twenty, thirty, or forty years, and realize that it’s probably going to take money to get there. So, begin by putting money into your 401(k) or IRA right from the beginning. Even if it isn’t much, time is your greatest asset so don’t let it go to waste.
Author: Jeremy Vohwinkle
My name is Jeremy Vohwinkle, and I’ve spent a number of years working in the finance industry providing financial advice to regular investors and those participating in employer-sponsored retirement plans.
Great advice for the married couple. Not easy to do, but great advice. Another thing I would suggest is a monthly spread sheet where you look at everything at the end of each month to see how you did and have it YTD. I do this with my husband and it helps us know where the money goes and it gives me ideas of where we could reallocate. Better to have all the cards on the table.
You hit it in the title of each item: discussion. It's all about communication. Communicate with your spouse about any issue, but especially finances, and you'll avoid a lot of frustration.
Thankfully my husband and I had many of these conversations when we first moved in together. However, we discussed insurance once we got married. We haven't talked about our wills yet though, possibly because we're young and don't want to think about it, but it needs to be discussed.