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If you’re newly married, there’s a good chance financial planning is one of the last things you want to be doing right now. And if you’re reading this from your honeymoon in some far-flung location, we assure you this article can probably wait until you’re stateside again. But if you’re still tuned in, it’s likely because you recognize just how important financial planning is at any stage of life –– and especially just after marriage.
So, in between trips down to the beach or the swim-up bar, read on for all you need to know about family financial planning for couples.
Marriage is a major step for any couple. For some, this may be the first time you live together, and squabbles about closet storage space, routines, and spending habits are almost unavoidable. Ultimately, this change is essential for growth, and can help to strengthen your relationship in the long run. But one of the biggest post-marital changes can take far more getting used to than an inconvenient morning routine, bed-hogging behavior, or aversion to tidiness –– and newly married couples will quickly discover just how different life can be when finances, debts, taxes, and financial future are linked to another person.
With that said, these things don’t necessarily have to be linked. See, just because two people get married doesn’t mean their bank accounts suddenly merge, tax filing statuses auto-update, and separate debts become consolidated. Rather, married couples can decide if joint accounts are part of their story or if they’re better off staying “single” in some ways. In other words: The only things that change are the things that newlyweds want to change. And deciding what these things are is one of the most important aspects of financial planning for couples.
While each newlywed couple is different, there are a few financial planning tips that are more-or-less universal. As you and your spouse begin piecing together a joint financial plan, keep the following in mind.
As mentioned above, newlywed couples don’t have to change anything about their current financial status. They can maintain separate accounts like their own bank account, file taxes individually, and even maintain separate residences if that’s what works best for them. However, there are a number of benefits to marrying your finances after marrying each other. For one, you can foster a sense of togetherness by combining your resources. After all, you are building a future together –– and it’ll take two to make that possible. Further, marrying your earnings can make it easier to build a joint budget, which is a valuable component of financial planning for couples. Yet another benefit of combining your finances, either by merging bank accounts or creating a separate shared account, is that couples who marry their finances are less likely to split up1, according to a study cited in the Washington Post. Again, each newly married couple is different, and the decision to combine finances is an important one –– so include this in your initial money conversation and talk it through with your spouse to make sure it’s the right choice for the two of you as well as your shared future.
Whether you make the decision to merge bank accounts, open a joint account, or keep your finances separate, setting long and short-term financial goals is one of the best steps newlyweds can take to align with their partner and begin building your future together. These financial goals can run the gamut, from paying off loans and getting out of debt, to saving for your forever home or financial planning for retirement. No matter what you hope to accomplish, putting two heads together to craft a plan of attack will give you better odds of success, and ensure that your joint goals are in service of each other’s personal finance goals.
Communication is key throughout every aspect of a new marriage, but it’s especially vital when it comes to setting goals together. And while we can’t help you improve your marriage’s lines of communication, we can help you properly strategize to accomplish your savings goals.
If you’ve started a new job, been tasked with completing tax information, and wondered, “who is the allowance section for?” you’re about to find out. As part of their post-I-do to-do list, newlywed couples must complete new W-4 tax forms to reflect their updated withholdings. These will determine the amount in federal income tax which your employer withholds from your check, according to your annual income and deductions, and, of course, your filing status.
On the subject of filing statuses, it’s worth noting that newlyweds aren’t forced to file their taxes jointly with their spouse. And in the case of couples where one party is a freelancer or small business owner, it may make more sense for the standard employee to file on time rather than waiting for them to get their ducks in a row. With that said, most couples will likely benefit from filing jointly, especially marriage in which one spouse makes significantly more –– and may see their income pulled into a lower tax bracket.
Whether or not you and your spouse are adopting the “what’s mine is yours” approach in your new marriage, the financial decision to assume your spouse’s debt and expenses can be a tough one to make. However, in the context of financial planning for couples and accomplishing long-term goals as a team, you may find that tackling debt jointly may be the path of least resistance. After all: If their debt is the one thing standing in the way of your future, joining the fight to get rid of debt can get you there quicker.
Still, money can be one of the more difficult topics for new couples to discuss. But, while we’re not relationship experts, we can say that spouses who can have open dialogues about these difficult topics –– and develop a joint strategy for achieving their financial goals –– will likely have a far easier time working through speed bumps which, compared to money, will feel like a walk in the park. On the subject of openness…
While not necessarily on the topic of financial planning for couples, embracing honesty can make the perfect complement to each of the above tips. Here’s why: No matter how long you and your spouse have been together, getting married is, in many ways, a fresh start. And starting fresh with a policy of transparency can lay the groundwork for the next five, 15, of 50 years of your partnership.
When you set common financial goals, you’ll do so honestly –– and in a way that will actually benefit your future together. When you make the decision to merge your finances (or not) you’ll go into this venture in a way that honors both of your boundaries. In short, to borrow from a time-honored cliché, honesty is the best policy. And this is especially true with newlyweds.
At the end of the day, financial planning for couples is about one thing: securing a shared future. And to do this, newlyweds should be sure that they have the right financial instruments in place, ranging from an emergency fund and insurance to a carefully crafted estate plan. The value of these tools cannot be overstated, for they not only help safeguard you and your spouse’s goals while you’re both in the picture –– they ensure that they’re protected in the event of the unthinkable.
You might be thinking, “We just tied the knot, and now you want me to think about that?” and we understand that the subject is not exactly the cheeriest. However, embracing a seemingly bleak potential reality and implementing these tools can actually be one of the sincerest expressions of love. See, if something should happen to either you or your spouse, a life insurance policy that goes beyond what may be provided by your employer will ensure the surviving party is properly cared for in your absence; a well-funded emergency savings account will bridge the gap until that policy is paid out; and an estate plan can guarantee that their life isn’t made more difficult in your absence by lengthy jams. If selflessness is an indication of love, then these acts can be love personified.
Many couples will wait until they’ve tied the knot to do things like opening a joint bank account, setting shared financial goals, or joining forces to eliminate debt, but the truth is you can do all of these things as early as you please. In fact, while couples must be married in order to file taxes jointly, there’s no requirement for couples to be married in order to begin merging finances. It just comes down to your confidence in the relationship and your personal comfort level.
Other things, like setting shared goals, should absolutely be done as early as you and your partner are willing –– so you can walk into marriage arm-in-arm, armed with a plan as well as some ideas of how to accomplish it.
Just like fortifying a new marriage and ensuring its blissful longevity, financial wellness takes more than a quick review and some obligatory adjustments each time you begin writing a new chapter of your life. Rather, financial literacy takes constant work, and the investment of your time will –– quite literally –– pay off.
So: where to begin? Newlyweds can start with the above strategies to make sure that all the bases are covered when the ink dries on the marriage certificate before drilling deeper into our resource library for saving strategies, how-to guides, and best practices for expecting (and preparing for) the unexpected. While financial planning for couples involves several joint efforts, spouses should devote time to their own financial wellness, as well. After all, every new couple can benefit from some occasional “me” time, and the same goes for your financial literacy efforts.
Whether you only leverage the above tips or dive into the depths of our growing resource library, you, your spouse, your relationship, and your financial future will be better for it.
1. Washington Post. Should People Combine Their Money After Marriage? https://www.washingtonpost.com/business/should-people-combine-their-money-after-marriage/2022/04/30/5a71fa76-c85c-11ec-8cff-33b059f4c1b7_story.html
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