Marriage is a huge life event and there’s no shortage of unsolicited advice. Continuing with that theme, financial tips for newlyweds should be received cautiously. Like money advice in general, it’s important to consider the source.
When I got engaged, the wedding planning began about two hours after the proposal. The whirlwind was on. I never fully appreciated how much was involved. There were decision after decision—the venue, DJs, photographers, and flowers. The list goes on and on, but there is also the financial aspect to consider.
Rachelle Wiggins, owner of Cain Event Planning, explains how excitement can lead to poor decisions. “Oftentimes, I see brides and grooms buying wedding items and making commitments before they have clearly identified their budget and wedding day vision.” While it can be tempting to splurge, Rachelle recommends setting a budget because “doing so will help save a lot of time, money, and frustration down the road.”
Americans Are Getting Married Later In Life
While getting married can seem like a fairy tale and should be enjoyed to the fullest, it’s also a lot like a business merger. Recent data indicates that Americans are marrying later than in previous decades.
In 2021, the national median age for first marriages was approximately 30.2 years for men and 28.1 years for women, reflecting a significant increase over the past 48 years according to USA Facts. This trend is further supported by U.S. Census Bureau data, which shows that the median age at first marriage has reached historic highs, with men marrying at a median age of 30.4 and women at 28.6 in recent years.
By this age, both bride and groom have established careers, finances, and credit (for better or worse). Going from single to married is a lot like being self-employed and merging with another business owner. It is not without challenges. Here are some suggestions for when your businesses merge—I mean, get married.
Banking
Start by figuring out what your joint expenses are. These are the things you share or both use, such as rent or mortgage payments, utilities, groceries, and shared subscriptions. Set up a joint bank account and pay the joint bills from there. This setup can simplify financial tracking and reduce misunderstandings.
At the same time, keep your own checking accounts to pay for things that are for your benefit only. This will also come in handy when it comes time to buy presents for each other or indulge in personal hobbies.
Discuss financial habits openly and honestly. Are you a saver, while your partner is a spender? Understanding these differences can help prevent conflicts and foster a healthy financial partnership. Establishing clear expectations for saving, spending, and contributing to shared expenses will go a long way in ensuring financial harmony.
Retirement Plans
Be sure to add each other as beneficiaries to 401(k)s, IRAs, and any other retirement accounts. This step ensures that your partner is protected should something happen to you. Take it a step further and designate contingent beneficiaries in case an accident happens that involves you both.
While you’re at it, review your retirement contributions. If one partner has access to a better employer-sponsored retirement plan, consider maximizing contributions to that account while balancing other financial priorities.
Retirement planning also involves setting goals together. What kind of lifestyle do you envision for your golden years? Aligning your visions will help you craft a strategy that works for both of you. It’s never too early to start discussing these plans, even if retirement feels decades away.
Estate Planning
Marriage is also a good time to consider estate planning. Draft or update your wills to reflect your new marital status. Establish powers of attorney and healthcare proxies to ensure that your spouse can make decisions on your behalf if you’re unable to do so. While these conversations can be uncomfortable, they are essential for protecting each other and your assets.
Taxes
If this is your first marriage, you’re likely switching from filing your taxes as Single to Married Filing Jointly (MFJ). This change is relatively straightforward and will likely result in a more favorable tax situation. However, without basic tax planning, you might miss some tax saving opportunities.
Credit and Debt
If credit scores aren’t what they should be, start taking steps now to improve your numbers. Simple changes, like paying bills on time, reducing credit card balances, and correcting errors on your credit report, can improve your credit faster than you think.
Keep in mind that your credit scores can impact joint decisions like securing a mortgage or financing a car. Collaborating on improving credit can strengthen your financial position as a couple.
Consider pulling your credit reports together and reviewing them for accuracy. Transparency about debts and financial obligations is crucial. If one partner has significant debt, create a repayment plan together. Tackling these challenges as a team will build trust and set the stage for a financially stable future.
Life Insurance
Get life insurance sooner rather than later. Waiting means you’re another year older and thus more expensive to insure. Or worse, you delay only to find you no longer qualify for coverage due to recent changes in your health. Life insurance is especially important if you plan to have children or share significant financial responsibilities like a mortgage.
Discuss the types of life insurance policies available, such as term life and whole life, to determine what best suits your needs. Ensure that the coverage amount is sufficient to replace lost income, pay off debts, and provide for any dependents. Regularly review your policy as your circumstances change, such as having children or buying a home.
Communication: The Foundation of Financial Success
Open and honest communication about finances is the cornerstone of a successful marriage. Schedule regular money talks to review your budget, track progress toward financial goals, and address any concerns. These conversations don’t have to be formal; they can be casual check-ins over dinner or during a weekend walk.
Discuss your financial values and priorities. What’s most important to each of you? Travel, homeownership, starting a family, or building a business? Understanding each other’s motivations will help you make decisions that align with your shared vision for the future.
Financial Planning For Major Milestones
Marriage often marks the beginning of planning for significant life milestones, such as buying a home, starting a family, or pursuing higher education. Each of these goals requires careful financial planning.
Start by creating a roadmap for achieving these milestones. Break them down into manageable steps and assign timelines. For example, if you’re saving for a down payment on a house, determine how much you need to save each month to reach your goal within your desired timeframe
Building a Financial Safety Net
Life is unpredictable, and having a financial safety net can provide peace of mind. Aim to build an emergency fund that covers three to six months of living expenses. This fund can help you navigate unexpected challenges, such as job loss or medical emergencies, without derailing your financial plans.
Celebrating Financial Wins
Don’t forget to celebrate your financial successes along the way. Whether it’s paying off a credit card, reaching a savings milestone, or sticking to your budget for a full year, take the time to acknowledge your achievements. Celebrating together reinforces positive financial habits and keeps you motivated.
Financial Tips For Newlyweds: Final Thoughts
Enjoy every minute of your marriage adventure, but don’t forget the financials. You’re not just getting married; you’re merging your businesses. Financial tips for newlyweds are common so take them with a grain of salt. However, addressing finances thoughtfully and proactively, you can build a strong foundation for a lifetime of love and prosperity.
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