With wedding season in full swing, it’s important for couples to discuss their post-nuptial financial lives before anyone says, “I do.” According to a recent Money magazine survey, 84% of couples say money causes arguments in their marriages.
“Many couples find it difficult to discuss money,” Janice Zajac, CPA, owner of Financial Responsibility Analysis Systems, said. “The best way to overcome financial obstacles as a couple is to jointly review bills and establish a spending and savings plan you both agree with. This allows you both to play a key role in your financial future, preventing one spouse from becoming the primary or sole financial manager.”
These tips can also help alleviate the stress that comes with merging money.
Be honest about financial pasts. To avoid unexpected surprises, talk openly about each other’s financial situation. Make sure to get copies of your credit reports from each of the nationwide consumer reporting companies. These can be requested for free every 12 months at http://www.annualcreditreport.com/. Knowing what debt you already have will ensure you both have realistic financial expectations going into your marriage.
Discuss money management. Will you have a joint account, separate accounts or both; what is your savings plan; who will handle the bookkeeping and investment planning? Before you tie the knot, make sure you have both agreed on the answers to these questions. It’s important that you are both in agreement, so you can begin saving for your future.
Get your documents in order. Marriage triggers several changes that should be reflected in key financial paperwork. You may want to add your spouse as the beneficiary for your insurance policies, 401 (k) plan, individual retirement accounts, investment and savings accounts and any other assets. Also, don’t forget to write or update your wills to ensure that your family is provided for.
Zajac recommends creating a worksheet to manage your important documents that is updated yearly when you prepare your tax return.
“Building a basic worksheet is a simple way to keep track of your life documents.” Zajac said. “Make sure to update your worksheet at least once a year, so your important documents are always in order.”
Review your insurance. Combining insurance policies may leave you with too much or too little coverage in some areas. If you are moving, asses your homeowner’s or renter’s policy to make sure it fully covers your new location. Look closely at each spouse’s health insurance to see if one policy is better than the other. This is also a good time to begin analyzing your life insurance options to ensure that each spouse is well provided for and that you have chosen the policy that suits your needs.
Budget for the future. Whether you are saving for a new house, children or a luxurious vacation, creating a budget you both agree on will help you avoid financial problems and disappointments down the road while keeping you on track to meet your financial goals.
Reprinted with permission from the Ohio Society of CPAs.