Merging Finances After Marriage
Photo Credit: Foto Pettine, Unsplash
Key Points
■ Be honest with each other and your financial advisor or investment professional about your current financial situation
■ Budget thoughtfully in light of present and future needs
■ Work toward shared long-term savings goals; review them annually with your financial advisor or investment professional
■ Determine if it is beneficial to combine accounts and insurance coverage
■ Discuss estate planning
Consider this to-do list when collaborating with your financial adviser on integrating funds and planning for the future.
Gather Statements
Your income, savings, and debts should all be fully disclosed. Your financial advisor must clearly understand your combined balance sheet to lay the groundwork for future decisions and goals. To acquire an overview of your financial condition, use bank statements, investment statements, credit card statements, and other relevant documentation.
Talk About Financial Goals
■ What do you want to achieve in the short and long term?
■ Do you want to get out of debt?
■ Saving for a home?
■ Do you have a retirement plan?
■ Do you plan to save for your children's education?
A financial adviser or investing specialist may assist you in determining how to work toward these objectives, given your risk tolerance and time period. This is especially true when it comes to life-changing events like childbirth or, in the case of a second marriage, welcoming stepchildren into the household. Long-term goal planning is essential for financial peace.
Compare Your Savings and Spending Habits
This is frequently a touchy subject when one partner is a saver, and the other is not. Discuss each other’s tendencies to strike a solution that both of you will be happy with.
Create a Budget
After you have figured out each other's present financial condition and spending patterns, it is time to set monthly spending and savings objectives. Numerous websites provide printable budget forms. It may appear time-consuming, but having a written plan to examine with your financial adviser allows you to manage expectations and avoid disagreements.
Compare Insurance Plans
Many working couples evaluate their companies' healthcare plans to determine if a family plan or solo coverage is best. Additionally, combining vehicle and homeowner's insurance through the same provider may result in a discount.
Change Your Beneficiaries
First, draft and update your will, including amending the guardianship of stepchildren as needed. This phase is always critical, but it is especially vital if this is your second marriage and either of you had children from a prior relationship. You need to know who will hold your assets if something happens to you. Your adviser can assist you in assembling a team of specialists, such as tax and legal consultants, to ensure that your estate plan is clear, thorough, and current. Moreover, review your investment accounts, savings accounts, retirement plans, insurance policies (life, health, auto, and homeowner's), and other accounts and evaluate your beneficiary designations, making any required changes.
Open A Joint Bank Account
A joint account is an excellent way to manage combined household spending and savings. Many couples, though, use separate funds for their discretionary expenditures. This option should only work if you agree on each account's purpose. Likewise, clearly state your demands and concerns so there are no misunderstandings later.
Consider a Prenuptial Agreement
Many couples find it challenging to bring up the subject of a prenuptial agreement since it is not romantic. A prenup is usually unnecessary if you only have an apartment and an income. Still, you should consider getting one if you own real estate, own a business, have children from a prior relationship, or have significant debts or assets. Get legal advice about community property rules covering shared ownership of assets and debt brought into the marriage and property acquired after the wedding. Consider a prenuptial agreement to be another type of insurance. Nobody expects a vehicle accident, but it's critical to have coverage when one does.
Important Disclosures
This material is provided for general and educational purposes only and is not investment advice. Your investments should correspond to your financial needs, goals, and risk tolerance. Please consult an investment professional before making any investment or financial decisions or purchasing any financial, securities, or investment-related service or product, including any investment product or service described in these materials.
Portions of this article were sourced from the work of MFS Heritage Planning. Neither MFS nor any of its subsidiaries are affiliated with Optima Capital Management.
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