Wedding season is in full bloom, which means a fresh crop of newlyweds will be spending the summer adjusting to married life. When the honeymoons over and you come back down to earth, the first order of business is to get your finances in line. Even if you had all your ducks in a row when you were single, sharing a household with your spouse requires discussion, planning and changes – sometimes a lot of changes – to your financial portfolio. Not sure where to start? Here are five financial planning tips for newlyweds that will make your transition to married life a piece of (wedding) cake.
Lay All Your Cards on the Table
Get the ball rolling by presenting your financial documents to each other. First, tally up all your assets. These might include your savings, checking and retirement accounts as well as any real estate holdings or collectibles. Next, account for all your debts – e.g., student loans, credit card debt, mortgages, or car payments. Then determine your net worth by subtracting your debts from your assets. This is also a good time to present your credit reports to each other. And if you havent already, tell your spouse how much you make in a year. This way youll both know what youre dealing with from the get-go.
Set up Your Bank Accounts and Filing Status
Now that you know what your combined net worth is, its time to make a decision about how you want to set up your bank accounts. Most couples opt for either joint accounts across the board or some combination of joint and separate accounts. Of course, keeping entirely separate accounts is an option, too – and may be advisable if one of you has a lot of debt or a severely compromised line of credit. If you have an accountant who helps you prepare your income taxes, discuss whether it makes more sense for you to file jointly or separately.
If you decide to file jointly, your tax bracket will likely change. If you and your spouse each make $50,000 a year, for example, youll probably owe a lot more in federal taxes than either of you are used to paying with a combined household income of $100,000. Ask your accountant for a tax projection to see how much youll have to pay if you file jointly, then see about changing your withholdings or maximizing your 401(k) contributions to avoid falling into a higher tax bracket.
Establish Your Financial Goals
Next, sit down with your spouse and set some clear financial goals for your life together. These goals can be divided into three categories: short-term or emergency goals, like covering your bills for the next three months to a year; five-year goals, which might include eliminating debt, a down payment on a home, or an extended vacation abroad; and long-term goals, such as paying for your childrens education or your retirement. If you have an employer-sponsored retirement account, be sure to contribute the amount required for your company to match it. To improve your chances of meeting your financial goals, set a time each week to review your spending and saving habits – and ensure that bills are being paid on time.
Update Your Beneficiaries
Chances are, the beneficiaries you currently have listed for your will, trust, life insurance policy, IRA, 401(k), checking account, or savings account dont include your spouse. Now that youre married, youll probably want to name your spouse as your primary beneficiary for all of these policies and accounts – otherwise, someone else will be getting the proceeds if something happens to you. Dont have a will? Make one, especially if you and your spouse already have kids. Without a will, the state will be forced to make decisions about your estate and, if theyre underage, your children.
Update Your Insurance Policies
Do you and your spouse both have health insurance through your employers? It may make more sense for you to be on the same plan – especially if one offers better coverage at a better price. For disability, evaluate how much each of you will be impacted financially if something happens to your spouse, and make adjustments accordingly. Dont forget to add your spouse to your auto insurance for your vehicle and, if applicable, to the homeowners’ policy for your house. If neither of you has life insurance, now is the time to get it. Term life insurance is the most affordable way to protect your spouse financially in the event of your passing. If you already have a life insurance policy, you may need to apply for more coverage – especially if youre planning on buying a home or having children anytime soon. Whether you need to reevaluate your current coverage or buy a new policy, SelectQuote is a great place to start. SelectQuotes expert agents’ comparison shop the leading companies they represent to find the right life insurance or auto and home insurance policy for you at a price you can afford. For life insurance, visit SelectQuote or call 1-855-872-1266. For auto and home insurance, visit SelectQuote Auto & Home or call 1-888-267-3282.