Newlywed couples receive all sorts of gifts. From china to cookware, bedding, towels, silver, serving pieces, and appliances, just about any item you can find in a well-stocked home section of a department store has probably been given as a wedding gift. What’s rarely received is advice on how to begin your marriage on a firm financial footing. Let’s be real: An open, honest, no-holds-barred conversation about your financial past, present, and future isn’t as much fun as picking your honeymoon destination. It’s far more essential, though, to set you up for a good marriage. Even if you’ve been together a while or have already started to combine finances before you said “I do,” you’ll want to take some time after the wedding to make financial moves that will prepare you for a stable future together.
Talk About Your Financial Lives
The first money move you should make after you get married (but before you start combining finances) is to have a candid and open conversation about both of your financial realities. Share all of the details. Here are the questions to ask:
- What’s your credit score?
- What’s your debt load?
- Do you have student loans?
- Do you have a car payment?
- Do you have credit card debt?
- How much do you pay toward your debt each month?
- How much do you have saved?
- How much do you contribute toward retirement?
- What other investment accounts or insurance policies do you have?
Don’t pass judgment on the state of your spouse’s financial life. The goal here is to know where both of you are financially so that you can make plans for your future.
Consider Shared Accounts
One reason complete financial transparency is so important is that it will help you decide as a couple what credit card, loan accounts, and bank accounts each spouse should be added to as an authorized user or equal account holder. For example, if your spouse has excellent credit but you have a credit card that you’ve regularly maxed out and made late payments on, don’t add them to that account. If you do, your mistakes can migrate to their pristine credit report.
Couples commonly grapple with how to set up their accounts. Should everyone maintain their own? Should everything be shared? Many couples find that the hybrid approach works best. Both spouses have access to one bank account, and money for shared bills (food, housing, utilities, etc.) is added to the account and used to pay for these expenses. But both people still maintain individual accounts for their personal budget (student loan payments, haircuts, drinks out with friends). There’s no single right approach, though. Get a feel for what works best for both of you.
Make a Budget
Making a budget isn’t easy, especially when you’re first married. You’re accustomed to having to worry about covering your financial needs out of your paycheck and prioritizing financial goals as you see fit, but now, you have to balance your needs and priorities with those of your spouse. Start by determining your necessary expenses: housing, utilities, food, car expenses (payments/insurance/gas/maintenance), and debt repayment. Make sure your income can cover these necessary expenses. If one (or both!) comes to the marriage with a lot of debt, you’ll want to make a plan for how you will handle that debt.
As you budget your money, you’ll also want to consider your long-term goals. Common goals include a healthy emergency fund, a house, a family, or going back to school. You’ll immediately want to start earmarking dollars to go toward those goals. Next, work in some fun money for both of you. Date nights are essential for newlyweds, but so is time (and money) for friends and hobbies. Tracking expenses and adjusting the budget as necessary is a vital part of successful budgeting. Results of the tracking and necessary adjustments should be brought up when you and your spouse meet for a money date.
Review Insurance Coverage
Your change in marital status means you need to review your insurance coverage. First, all of those wedding gifts mean your belongings probably just underwent a serious upgrade. Create a home inventory that lists everything you own, and review your renter’s or homeowner’s policy to see if you have sufficient coverage for your new belongings. If you each had a separate auto policy, get quotes to see if combining your policies saves you money. If you plan on sticking with your current policy, let your insurance company know you are now married: Sometimes, that saves you money on your premium! Also, if you don’t have life insurance, now is the time to get it.
Check Your Beneficiaries
Most newlyweds will probably want to make their new spouse their primary beneficiary. Most people think about changing their life insurance beneficiary (if they have a policy), but there are other accounts to consider as well. You can designate a beneficiary for some bank and investment accounts; retirement accounts and annuities typically require you to assign a beneficiary, too. Make a list of your accounts and start contacting your financial institutions to change the beneficiaries on your accounts. Usually, you’ll need your spouse’s full legal name, date of birth, and Social Security number.
Update Your Tax Strategy
Married couples can choose to file their taxes jointly or separately. Which one should you choose? Typically, you should file jointly, as you’ll be able to reap more tax benefits this way. Interest on student loans and tuition payments can only be deducted if you choose married filing jointly. The Earned Income Tax Credit is also only applicable if you elect to file jointly. And your standard deduction will be lower if you file separately. However, in some situations, filing separate returns might be the smart thing to do. Trying using online tax software to create both joint and separate returns so you can see which option lessens your tax burden the most.
Are you hesitant to file jointly because one of you owes the IRS or is delinquent on student loans or child support obligations? Filing the Injured Spouse Allocation Form protects the innocent spouse’s share of a joint refund from being garnished.
The other important tax consideration to review is how much your employers are withholding from your paychecks. Use a tax calculator to check how much of your paycheck should be withheld for taxes. If your current withholding is too high or too low, fill out a new W-4 for your employer.
Plan Regular “Money Dates”
The conversations you have with your spouse as you start navigating marital finances aren’t one-and-done dialogues. Instead, financially successful couples carve out time to regularly review their budgets, financial goals, and expenses and make adjustments as necessary. Set a monthly date to go over your finances. This regular check-in will allow you to address small issues before they become large issues. Set the date up for success by agreeing to ground rules, like staying positive and not disparaging each other. Make sure each partner feels heard. Writing out a wish list of goals is a good way to make sure both of your ideas for the future are considered. If one spouse typically handles the finances, money dates are even more important because they’re a chance for the other spouse to be brought up to date.