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Marriage, for all of its romantic grandeur, also comes with its fair share of less charming expectations. Namely: finances. You just tied an emotional and financial knot that will require communication and effort to keep snug. Don’t fret, though, you knew this was coming. And with our guide to newlywed finances, you’ll be more than equipped to handle all of the planning, the numbers, and the money talks coming your way.
How To Have The Money Talk
In order to manage your finances and expenses together as a couple, you need to talk about your finances and expenses together as a couple. Sure, this isn’t a conversation that excites many but it also doesn’t need to be stressful. Here’s how to make the money talk easy:
You don’t want to spend all day on this so it’s best to gather any documents or statements you need so that neither of you wastes time searching through your physical or digital folders. Ideally, each of you will bring the following:
- A list of your accounts and their amounts
- A list of any debts and their interest rates
- Notes on any money owed to you
- Your total income
- A list of short- and long-term financial goals
Agree to disagree.
The money talk doesn’t need to be negative but you should realistically anticipate some tough moments. When things get tense, be prepared to talk it out and move past it. Try your best to articulate your points in a collected way and always listen when your partner explains his or her concerns. Identify the areas that you could afford to bend a little—and the areas that you simply can’t—and be upfront about both.
Talk values, not just numbers.
Obviously, finance is a pretty numbers-heavy arena. When it comes to talking about those numbers, though, you need to bring in the human side of things. The ways and reasons that people spend or save money are typically a result of their values. Discuss yours and hear your partner out, too.
For example, you may prefer to spend on experiences like vacations over new clothes or other big-ticket items. Your partner may be someone who needs the newest pair of sneakers that drop every few months. Neither of you should necessarily have to compromise your values but you do need to be on the same page. Discussing these differences upfront should help you down the line when they cause issues.
Now that you’re in the right frame of mind to talk all things finance, here are the things you should discuss.
1. Set newlywed financial goals.
You probably noticed that we recommend you come to your money talk with short- and long-term goals. That’s because your financial goals should act as guidelines for all of your financial planning and discussions. Some common newlywed financial goals are:
- Taking a yearly vacation
- Saving for retirement
- Reducing debt
- Buying your first home
- Starting a college fund for future children
- Home renovations
- A new puppy or other pet
- Building an emergency fund
When you outline your immediate and less immediate financial wants and needs, you can start to actually create the budget and savings plan that will help you reach those goals.
2. Discuss a joint bank account—and then open one.
Merging finances is a big deal, but, for many couples, it’s also an obvious step to achieving certain financial landmarks. You can, of course, maintain separate bank accounts, but a joint account can help simplify household expenses and also help you save for larger purchases or financial goals like retirement. You may also choose to go all in and actually only maintain one joint bank account in order to streamline your finances. Regardless, whether or not to open a joint bank account is a big discussion. Don’t be afraid to ask for professional financial guidance when you need it.
3. Review insurances.
Take time during your money talk to review all of your insurance policies. These could include everything from homeowner’s or renter’s insurance, life insurance, health insurance, car insurance—really any kind of insurance, major or minor. Look for duplicate coverage or total lapses in coverage. Also, figure out how combining households impacts these policies—and how to get the most out of your updated living situation. For example, if you both have homeowner’s or renter’s insurance, you don’t need the double coverage. Combining auto insurance policies may also save you on those premiums.
If you both have health insurance, it’s smart to review the plans. It may be better to combine under one insurance or it really could make more sense to keep your individual coverage. Make this a priority. Couples are typically given 30 days after marriage to add a spouse as a dependent without providing insurability.
Many couples make the mistake of skipping over life insurance “for now.” Young newlyweds, especially, may not see it as immediately necessary—particularly if they’re trying to save for other expenses. But life insurance is a gift to your family members should the worst happen. It can replace income, eliminate debts, cover funeral costs, and more. You and your spouse can work with an expert to determine if term or permanent insurance is right for you. Don’t skip over this crucial part of your newlywed finances.
4. Assess your tax situation.
Death and taxes, right? Now that you’re married, you have two choices when it comes to filing your tax returns. You can continue to file separate returns or you can begin to jointly file. We definitely recommend consulting with a tax or finance expert to determine your best option. If you meet with a pro, be sure to bring any recent tax documents and recent pay stubs.
You should both also notify your employers (if you haven’t already) so they can update your W-4 tax-withholding forms on file. Your household has grown so you may decide to increase allowances to two—one for each of you. If you have children, that can go up even more. Again, a certified tax or finance expert can help you decide what’s best for you and your new spouse upfront.
5. Make or update your will.
Like life insurance, your will isn’t exactly fun to think about. Also like life insurance, though, your will is a crucial part of your newlywed financial planning. In fact, your will is the most important document in your estate. Dying without a will can cause financial havoc for remaining family. Even if you already have a will in place, you have to update it once you’re married. Estate laws vary by state so call your attorney and create or update your wills as soon as possible. Then, you’ll want to review them every three to five years to make sure they address any changes.
Financial health is an important part of relationship health. Money talks aren’t always fun but they are always necessary and can help cut down on any issues in the future. When all the finance talk feels a little heavy, seek out a professional. Our friends at SoFi can help you create financial solutions that fit your goals.