You like the same movies and you finish each other's sentences, but where do you and your significant other stand on important financial issues? Take a financial compatibility quiz created by Virginia CPAs as part of the Virginia Society of Certified Public Accountants' (VSCPA) award-winning Financial Fitness community service campaign.
Whether you’re walking down the aisle or celebrating your silver wedding anniversary, the VSCPA offers the following personal finance tips to keep your love, and your money matters, in wedded bliss.
Set financial goals
Buying a home, starting a family, sending the kids to college, and retiring are all exciting life goals - they’re also expensive ones. As a couple, talk about what you want in life and determine what financial steps you must take in order to get there.
Create a budget together
To ensure the financial success of your relationship, it’s important to set a spending plan. It will be difficult to save for your future if you don’t have a clear idea of your current finances and how you’re spending your money. Whether you use a software program or a sheet of paper, figure out what you earn and what you spend. Then, see where you can cut back if need be.
Assign financial responsibilities
Agree on what role each of you will play in keeping your finances on the right track. Determine who’s in charge of paying the bills, monitoring investments, filing paperwork and other financial tasks.
Pay off debt
Weddings, buying a home and having a baby are all life-changing events. You may have turned to credit cards to help pay for these. Whether you have a serious shopping compulsion or student loans, it’s time for full debt disclosure in your relationship. Talk honestly and openly about your debt and decide on a repayment plan. Take a vow to forsake all other debt, except for your home mortgage, as long as you both shall live.
Review your insurance policies
Having the right type and amount of insurance can give you peace of mind in knowing that your family’s financial future will be secure. Life insurance is recommended, but the amount of life insurance you need depends on the number and ages of your children, your income level, debt level and the value of your assets. Also, make sure your wedding rings are protected from theft and loss by insuring them. Other types of insurance to discuss include homeowners/renters insurance, health insurance and long-term care insurance.
Discuss your financial tolerance
Are you a spender while your spouse is a saver? Does your spouse want to invest in bonds, whereas you’re interested in stocks? Get to know each other’s personal finance personality and tolerance for financial risk. You may also want to set some financial ground rules like determining a spending limit without first obtaining your spouse’s consent.
Update your beneficiaries and wills
Contact your company’s human resources department or your insurance agent to update or verify the beneficiary on your disability and life insurance. Make sure your will has been updated. Don’t forget to do the same for your 401(k), bank accounts, etc.
Start an emergency savings fund
You’ll want to be prepared if and when the car needs new tires or the roof springs a leak. By setting aside money each month, you’ll accrue savings for surprise situations. Most CPAs agree that your emergency cash fund should be equal to six months of income.
Plan for retirement
As a family, it may be difficult to save for both your retirement and your children’s education, but it’s important not to ignore your retirement needs. Keep in mind that student loans are available to pay for college tuition - but there’s no such thing as a retirement loan. Take advantage of your company’s 401(k) plan, particularly if your employer matches your contribution. And don't invest too conservatively. You need growth-oriented investments to achieve your goal.
For more personal finance information, visit www.FinancialFitness.org for budgeting worksheets, financial articles, tax resources and more. There are many simple ways to make good money management part of your relationship. Ask your CPA for advice on the steps necessary to make a real difference in your financial future.