Congratulations, you’re getting married! The flowers have been ordered, RSVPs are coming in, and the honeymoon is booked.
If you haven’t already, it is high time to start considering what your financial picture will look like as newlyweds. By openly disclosing financial concerns and having an honest conversation with your partner before marriage, the two of you can gain better insight into decision-making and how to best minimize future expenses.
Not sure where to start?
We have compiled a list of key financial questions and topics to address with your (future)spouse, to help prepare your financials for before and after your big day.
Before the Wedding
Set Yourself Up for Success
Leave judgment and disappointment out of the conversation. Your partner will feel vulnerable when disclosing delicate information such as finances. React with empathy and support and avoid any shameful rhetoric. It could even be valuable to reach out to a third party or premarital counselor to help moderate these important conversations and encourage positive communication.
- Do you feel safe sharing your finances with me in this time and environment?
- Do you feel this conversation would be better facilitated with a counselor?
Understand Your Roots
Open up about your past experiences with money. Growing up with different socio-economic backgrounds can result in different financial approaches. Awareness of these habits will cultivate respect rather than disdain in future conversations about money managing tactics.
- Are you Type A with managing money? Or do you take a more laid-back approach?
- Are you a saver or a spender?
- On a scale from 1-10, how often do you worry about money?
- What do you think I am good at when it comes to managing money?
- Do I have any discipline when it comes to budgeting?
Uncovering the Weeds
Now it is time to dive deeper into some tougher questions. It is easy to avoid asking these questions because they can bring up feelings of guilt or fear. But if not uncovered, these factors will continue to fester beneath the surface of your relationship.
- What, if any, outstanding debt do you have tied to your name?
- What is the status of your credit score?
- Is there something I am currently doing concerning our finances that adds stress to you, to us?
- Are these things that we can tackle together?
Planning The Wedding
The most exciting (and probably stressful) time of your life is finally here – wedding planning! While it is easy to become distracted in planning as there are so many minute details, the first major component includes coming to a consensus with your partner on these two questions.
- How much will you and your partner spend on the wedding?
- Who will pay for it?
These two questions can have a vital effect on how the marriage will embark and it’s important for you and your partner to have clear budget expectations set so that you and/or your partner are not spending inadvertently more.
Sticking to a budget can be tricky, especially if there are wedding traditions previous family members have held, religious practices, or other expectations that are necessary to include in your wedding planning. Prioritizing your wants and utilizing a pros and cons list with your partner is a wonderful way to organize a budgeting plan to help prep you and your partner for future wedding costs. Also, it is okay to say no! This day is about celebrating the relationship you have built with your partner – do whatever feels right for the two of you and have fun planning it together!
So… Who Pays?
Traditionally, the family of the bride is to cover all wedding expenses and the family of the groom is to pay for the variety of activities including the rehearsal dinner and honeymoon. However, times have changed and not all families have the financial means to cover these expensive costs. Therefore, it is important to have a clear understanding of who is graciously willing to chip in, how much, and where the money should be allocated to execute with planning. With these three areas identified, it will be much easier to develop a vision and get to organizing.
Determining the amount, you and your spouse will spend on wedding rings is also an important piece of planning and budgeting for your big day. Wedding rings symbolize the everlasting commitment to your partner and the eternal love the two of you share indefinitely. Therefore, many couples end up spending considerable amounts of money when choosing rings for their partner. Though, there are modern-day alternatives to the traditional wedding ring, such as a moissanite or sapphire stone that are a cheaper option than electing for a diamond. Whatever the choice you and your partner decide on, be sure to purchase additional insurance coverage if opting for the more expensive route so that you can replace your beautiful new ring if lost or stolen.
After the Wedding
After the prenuptials, nuptials, and post-nuptials, it can be difficult to return to reality. Luckily, with financial transparency already established between you and your spouse, consolidation of financial accounts should be a piece of cake!
There Is No “I” in Team
Moving through these next steps together is crucial. Here are some essential questions to ask before moving forward.
- Do you think we are trending toward a better financial position 12 months from now?
- Who will handle money management going forward? One of us, or both?
- Does either of us need to re-establish or build credit?
Checking and Savings – Yours, Mine, and Ours
Alongside keeping your own individual checking accounts, you can open a joint checking account where you deposit a percentage of your salary each month. This account should cover common expenses such as rent, utilities, groceries, etc. – so any “fun” spending you do for yourself could potentially stay on your individual account.
When it comes to saving, you can both continue contributing to your own savings and retirement accounts. Keep in mind beneficiary designations on your personal accounts as you may want to consider naming your spouse as one in the event something happens.
TIP! Bring the fun back into finances!
Nothing feels better than a blissful moment of financial freedom. You and your partner can feel this consistently by creating financial leeway (in a controlled environment, of course). We suggest setting aside $100 a month each to spend on anything you want. Now you can feel the exhilaration of a spending splurge without the stress of keeping tabs on what you’re saving!
Filing Tax Returns – Joint or Separate?
When it comes to filing taxes, there are two options couples can choose from: separate or joint. By filing taxes jointly, married couples can save money through tax deductions and income exemptions, such as the Earned Income Credit. Joint filers predominantly receive higher income tax thresholds over those who file separately. Though, there are some cases where filing separately might make sense too. For instance, if you or your spouse are part of an income-based student loan repayment plan, filing jointly might increase your monthly loan payments. We recommend weighing both options and reflecting on what makes sense for the two of you as every couple has their own unique financial situation.
If choosing to file taxes jointly, it is imperative to update your name in the U.S. Social Security Administration before filing your first tax return as a married couple. This is because your return cannot be processed if your name does not match that tied to your Social Security number. Since you’re at it, this is also a great time to review your payroll withholdings and W-4, adjusting where needed.
Credit Cards – Boost Credit Together
Proceeding with an honest conversation about credit scores, you can make your spouse an authorized user on your credit card. This can raise their score while you both reap the benefits of lower rates with a higher score. Be sure to maintain open lines of communication as to your monthly spending and budgeting so that you never spend more than you can pay off each month.
*Disclaimer*: If either you or your partner has poor credit, a lender may charge higher interest/fees than the spouse with good credit would have if he/she were on their own. If this is the case, create a plan with your partner on improving your poor credit score and choose what’s right for the two of you.
The significance of fiscal clarity and confidence is often overlooked in newlywed life. However, if you can treasure your partner, for richer or poorer, with full knowledge of their financial history and set goals for your financial future, you can be set up for boundless success.
Important Disclosure: This content is for informational purposes only. Opinions expressed herein are subject to change without notice. Beacon Pointe has exercised all reasonable professional care in preparing this information. Some information may have been obtained from third-party sources we believe to be reliable; however, Beacon Pointe has not independently verified, or attested to, the accuracy or authenticity of the information. Nothing contained herein should be construed or relied upon as investment, legal or tax advice. Only private legal counsel may recommend the application of this general information to any particular situation or prepare an instrument chosen to implement the design discussed herein. An investor should consult with their financial professional before making any investment decisions.
© Beacon Pointe Advisors. All Rights Reserved.