by Eunice Armstrong
First comes love, then comes marriage … then comes debt and other baggage!
Now that you and your spouse are one, transparency is important, especially when it comes to money. You should know each other’s credit scores, salaries, and any debts! You should set money expectations right away, make financial plans together, and then check in with each other regularly to keep your finances on track as things change. Recognize that you are partners in financial planning, and that should not be taken lightly. Check out these five ways to help unite your financial lives:
1. Set common and realistic goals.
You should set common goals with your spouse, and they should be realistic. Whether you’re buying a home, taking a vacation, deciding on childcare, or planning for retirement, each stage should be agreed upon by both parties. Saving should be a part of that list as well. Realistic goals are more motivating than those that seem endlessly out of reach.
2. Get organized.
It’s okay to admit that you didn’t talk genuinely about how you’ll manage money together before you got married, but trust me, now is the time to start. What you have, what you owe, what you spend, and how you feel about investing should all be part of the conversation. There should be no financial secrets. Make a list of shared assets including credit cards and loans that you are bringing into your marriage. Decide if your assets will joint or individual. Start a budget and stick to it. This should be much easier now that you have a built-in accountability partner.
3. Know your taxes.
First things first, once your marital status changes, Uncle Sam expects you to update your W-4 at work as well as your W-2 withholding allowances. These determine the amount withheld from your wages for federal and state income taxes. There is a lower withholding rate for people who are married, so one option available on the W-4 is to withhold taxes from your paycheck at a higher single rate. You literally check the “Married but withhold at higher Single rate” box. Some married people find that they do not have enough tax withheld at the married rate. This can happen, for example, when both spouses work. However, discuss with your tax preparer if you should file separately or jointly at the end of the year. Each case is different and you must do what’s best for your situation.
4. Review your insurance.
When you get married, it’s important to review, update, and sometimes purchase different types of insurance. This includes life insurance, health insurance, and disability insurance. Some insurance coverage may be provided by your employer, but if you’re both working, review your current coverage to see where you can cut costs and avoid redundant coverage. For example, it might be less expensive to be on your spouse’s health insurance than to pay for your own.
5. Update paperwork.
I never knew how extensive this actually was until I got married. You literally have to think of all the places that need this updated information. If you’re taking your husband's name, I recommend that the first place you go after you get your marriage license is to the Social Security office. Changing your name on your social security card is a pretty quick process. Once I did that, a bank sent me an updated card in the mail with my new name, without initiation on my part. How convenient. Now don’t forget your driver’s license, passport, credit and debit cards, etc. (I’m personally holding off on my passport until it expires, just keep in mind you need to book your international tickets in your maiden name.) Even the beneficiaries’ section on accounts, like your life insurance or retirement accounts, should be updated. Consider preparing a will, since this is technically the most important legal document in your estate. You and your spouse should contact your attorney for more information. Be sure to review them every three to five years to make sure they address your changing circumstances.
Talking to your spouse about money may not be at the top of your to-do-list, but it’s important for your marriage. Money discussions aren’t always easy but, as with any marriage issue, it’s best to approach them with an open mind and as a team. Thoughtfully working together leads to the financial harmony you’ll maintain in this new life together.
Try this financial compatibility quiz to find out how you and your partner align.