As you prepare for your big wedding day you are planning to make a lot of changes in your life. You are changing from being single to the beginnings of your own family, you are where and how you live and perhaps you are even changing your name. With all of this change, and in addition to planning a big party and a big move, you should also take the opportunity of marriage to reassess your finances and look at how your financial needs, goals and processes will change after the wedding.
Things to look at when you go over your finances after marriage
Getting married doesn’t mean you have to change all of your banking systems and merge all of your accounts. Instead, it is a chance to review your finances at a time in your life when your circumstances have changed, and your financial needs may have changed as well. Some of the financial matters you may want to consider when you’re getting married include:
- A joint bank account. Many couples continue on with completely separate bank accounts after marriage, and this should simply be a chance to consider your options, rather than just automatically merging your accounts. Consider opening a joint account which can fund the joint household bills such as the mortgage, power and water bills. Each of you can deposit a certain amount from your wages each week into the joint account, from which your bills can then be paid. This keeps your finances as a couple clear, straightforward and accessible.
- Joint credit cards. You each probably already have a credit card or two of your own, and when you get married you may want to consider getting an additional card on the account for your spouse. Remember that joint use of a credit card will mean the information from the account will go on both your credit reports so make sure that your spouse is able to remain responsible with their card use.
- Insure your wedding ring. Your home insurance is generally designed for average household items and anything of substantial value should be insured and listed separately. You can usually have the rings added to the same policy, but you will need to have them independently appraised, which should be easy enough to do since you’ve just developed a relationship with the jeweller who made the rings and they can usually do this for you for free.
- Invest your wedding gifts. With more and more couples living together or establishing their own lives before getting married, gifts of dinner sets and toasters are becoming less relevant, so the chances are good that you’ll have received some substantial amounts of cash as gifts for your wedding. Some couples designate this money for their honeymoon, but look at whether you can invest even just a part of it in a term deposit account which will lock in your savings and a guaranteed high interest rate for between one and seven years.
- Sell unwanted items. This doesn’t necessarily mean selling that new toaster you’ve just received as a gift – but you can of course, just don’t tell Aunt Mabel. What you can be doing is getting rid of duplicate items you and your spouse now have when you merged your two homes. If you both had your own homes prior to marriage, you are going to have a lot more duplicates than just a toaster, so why not profit from the situation and hold a garage sale or put up listings on Craigslist or eBay.
- Create a budget. You may already have your own household budget, but when you begin sharing your life with your spouse, you have to readjust your budget to reflect this change. This is a chance to set some goals and boundaries for spending in your new household, and will help avoid those fights over why there’s so many shoes and so little savings. This is where is can be useful if you did keep a separate account and merged one joint account for household bills. You can then look at your new budget and make sure you both contribute enough to the joint account to cover joint expenses, and then the money in your own accounts can be spent as you wish – if you do spend all of your money this week on shoes, don’t go dipping into the joint account to go to the movies with the girls.
- Discuss debt repayment plans. In the course of creating a budget you will have assessed all of your debt expenses as a couple, and the total can be quite frightening. Therefore, as you look at your budget, consider where you can find room for extra repayments to clear your debts quickly.
- Start an emergency fund. This should be separate to your joint expenses account, but should also be an account which you both contribute to. It is important to have an emergency fund saved in case of unexpected car repairs, the sudden death of an electrical item or in case you are sick or injured and are unable to work, or you lose your job. Set up a regular deposit from each of your accounts on the day you are paid so that your contributions to the emergency fund don’t get forgotten and at the same time you don’t even notice they’re gone.
- Health insurance. Now that you are part of a young couple and not just a young single, it is time to update your health insurance to a combined policy. You can often save on the premiums by taking out one joint policy, plus it allows you to be prepared for the future. In many cases you need to have health insurance 12 months before you fall pregnant, so even if you’re not specifically planning to start a family soon, it is a good idea to be covered just in case. There are also tax benefits and savings to be made if you sign up for health insurance when you are younger.
- Life insurance. Even if you both continue to work after you are married, as a married couple you come to rely on each other financially, and if one of you were to die suddenly, you want to make sure the other is properly looked after. This is where you can take out a life insurance policy with your spouse as the beneficiary so that they can cover the household costs without you, pay for your funeral costs and be able to maintain stability for any children in the future.
- Retirement plans. Retirement may seem like a long way off now, but the sooner you start thinking and planning for it, the bigger and better you can make those plans. Plus, now that you have someone you plan to spend your retirement with, you want to make sure they are on the same page and that your retirement savings will be sufficient. Take a look at what you’re currently contributing to your retirement savings and how much that would equate to when you retire – and what age you can retire. Discuss your plans for retirement too, because you will need a lot more savings if you intend to live overseas for six months each year, than if you just want to go on a caravanning holiday once a year.
You may find it difficult to talk about money, and many of us come from a generation where our parents didn’t involve us in the family finances and we didn’t know how a credit card worked until we got one. However, you don’t want to start off your marriage with different financial goals and expectations, because you’re surely already aware that one of the biggest reasons for marriage break ups is fighting about money. Therefore, as difficult as it may be to bare your entire financial history to your spouse, think about how rewarding it will be to discuss your goals and plans for the future, and how exciting it will be when you are able to map out a way to get to those goals together.
This article was written by Justin Toladro from Life Insurance Finder. A comparison website, aimed to provide the best information on life insurance