Money matters can be a sticking point for many engaged or newly married couples. Consider this list as you work with your financial advisor to merge finances and prepare for a future together.
What do you want to accomplish both short and long term? Eliminate debt? Save for a house? Plan for retirement? Save for your children’s education? A financial advisor can help you determine how to work toward these goals in light of your risk tolerance levels and time frames. This is especially important as you consider such life-changing events as the birth of a child or, in the case of a second marriage, welcoming stepchildren into the family. Planning for long-term goals is critical to financial harmony.
This is often a touchy issue if one partner is a saver and the other is not. Document and discuss these patterns. Be flexible so you can reach a compromise that you will both be comfortable with as a couple. This is important, as it can actually make or break a marriage.
Fully disclose your income, savings and debts. Your financial advisor needs to have a clear idea of what your combined balance sheet will look like to establish a foundation for future decisions and goals. Use bank statements, investment statements, credit card statements and other documents to get an overview of your financial situation.
Once you have an understanding of each other’s current financial situation and spending habits, it’s time to plan for monthly expenditure and savings goals. It may seem like a tedious task, but if you have a plan on paper that you can review with your advisor, you can manage expectations and avoid conflicts.
Many working couples compare their employers’ health care benefits and decide whether it’s better to opt for a family plan or keep individual coverage. Also, auto insurance may offer discounts if combined, along with homeowner’s insurance, under the same provider. Now is also the time to purchase an individual life insurance policy, if you don’t already have one. Consider purchasing either a 20 or 30 Year Term Life policy from an A+ rated insurer to cover you until retirement.
This step is always important, and particularly so if this is a second marriage and either of you has children from a previous relationship. First and foremost, create and amend your will, updating guardianship of stepchildren if necessary. You need clarity about who will own your assets should something happen to you. We at Malleo Financial Services can help assemble a team of professionals, including tax and legal advisors, to ensure your estate plan is clear, complete and up to date. In addition, go through your investment accounts, savings accounts, retirement plans, insurance policies (life, disability, health, auto, homeowner’s) and other accounts and review your beneficiary designations, amending them where necessary.
Open a Joint Bank Account
A joint account is wise for managing combined household expenses and savings. Many couples, however, also maintain separate accounts for personal discretionary spending. As long as you both agree on the purpose of each account, there is no reason why this option shouldn’t succeed. Again, be sure to communicate your needs and concerns clearly so there are no misunderstandings down the road.
Consider a Prenuptial Agreement
Many couples find it difficult to broach the topic of a prenuptial agreement because there’s nothing romantic about it. In fact, if all you have is an apartment and a paycheck, you don’t really need a prenup. However, if you have real estate, a business, children from a previous relationship or significant debts or assets, then you may want to consider one. It is critical to consult a legal professional regarding rules on community property, which address joint ownership of assets and debt brought into the marriage, as well as property acquired after marrying. Think of a prenup as another form of insurance. No one anticipates a car accident, for instance, but when it happens, it’s essential to have coverage.
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*This blog is strictly the opinion of Michael A. Malleo and not those of
ASH Brokerage Corp., nor any of our affiliates.
Malleo Financial Services LLC cannot and will not give any specific tax or legal advice.
Please consult your tax professional or legal professional for such advice.