You've decided to share your lives with each other. But what about your finances?
When you were just starting out, whatever you earned was all yours. But now there are two of you, and things are a little different. Because, let's face it, you're in this together, and what used to be "yours" is now "ours." How you handle this transition can make for a very happy marriage for years to come.
Don't be afraid to talk about money.
For most couples, money can be a very difficult subject. And even the most compatible couples can have very different opinions about spending and saving. So it's essential to have that conversation and make sure you understand each other before the credit card bills come due. You don't need to agree on everything, and you probably won't, but discussing it now can make things a lot smoother later on.
Some questions to ask each other:
- How much money do you make?
- What are all your sources of income and expenses?
- What assets are you bringing to the relationship?
- How much debt do you have?
Decide whether or not
to merge your money
Ideally, you'll both see the assets each of you brings to the marriage as "ours" rather than "yours" and "mine." But every couple is different. Some will pool all their resources. Others will create a joint account for shared expenses and retain individual accounts for personal ones. If one spouse has a significantly higher net worth, you might also want to discuss a prenuptial agreement. Then, of course, there's the issue of taxes. You should check with a tax professional to see what's right for you, but, in most cases you'll get the most financial benefit by filing your tax return as "married filing jointly." Remember, even if you get married on the last day of the year, the IRS considers you married for the entire year.
Create a financial
plan you can both live with.
When you talk about money, you'll want to discuss your financial goals—from buying a home and saving for your children's education to when and how you'd like to retire. This is also the ideal time to address each other's debts and spending habits. If one of you has outstanding credit card balances, for instance, work together to pay them down. After all, the interest rate is probably pretty high, and, because it's nondeductible, you don't get any tax breaks, either. And if one of you likes to spend while the other prefers to save, find a fair compromise that'll make both of you happy. You'll thank each other later.
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Put your money to work.
You'll want to get the most out of your money by putting it to work. That means keeping it in savings accounts, investment accounts, as well as interest-bearing checking accounts. For short-term goals such as saving for a down payment stick to more secure investments such as short-term bonds and CDs. Or you may want to consider high-yield checking and savings accounts. For longer-term goals, such as retirement or a child's education, a little more risk can help you to get a better return. Mutual funds are a great option because they can offer diversification within a single fund.
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Keep an eye on things and
ask for help when you need it.
Keeping track of your progress month after month can help keep you motivated. And if you feel like you need a little help, don't hesitate to ask. Regardless of how much money you have, every Schwab client can get a complimentary one-on-one consultation. Whether you need help with putting a savings plan in place or just want someone to review your progress to date, Schwab experts are ready to help.
Housekeeping, so to speak.
If you're planning a wedding or you've already had one, you know marriage is all about the details. It's easy to forget some, so this list should help.
- Changing your name. If you're changing your name, make it official right away. Order extra copies of your marriage certificate since some agencies require originals. Notify your employer, Social Security, the DMV, all your creditors, all your account providers, insurance, and anyone else you do business with. And don't forget to replace credit cards and other documents that have your old name.
- Update all your files. Update beneficiaries for your IRAs, 401(k) and life insurance as well as on the titles of all property you own.
- Take another look at your insurance. In most cases, you can add your spouse to your coverage as of your wedding date. If you both have health insurance benefits, make sure you're not paying for duplicate coverage. And if you both earn a similar salary, life insurance is probably a good idea. Of course, if you plan to have kids, you'll need to review your insurance needs again when the time comes.
