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Professional advice on financial planning for newlyweds

Congratulations newlyweds! Once the honeymoon is over, it’s time to consider how you will handle your finances moving forward. There is much to consider; this article will help you get started by walking you through some of the do’s and don’ts on financial planning for newlyweds.


Do

Do consider setting up joint accounts to pay bills

If you bank at different banks, you may want to consider moving all of your checking and savings accounts to one bank for simplicity. For joint assets, consider opening a joint checking and savings account to deposit your wedding gift checks into. Close any accounts in your individual names that are no longer needed. Consider changing your payroll automatic deposit to start going into a new joint account, and expenses to withdraw from this account. Communicate with each other so you don’t inadvertently overdraw your joint account.

Do review your casualty policies

Review the declaration pages for your casualty policies such as home, auto, umbrella, personal effects, and rental policies. Evaluate if it makes sense to consolidate policies with one insurer to simplify and possibly qualify for discounts. If yes, decide which agent and insurer is best to work with moving forward and set up a call to review your policies with them and discuss adding your spouse. Consider putting a policy in place for valuable personal property such as your wedding rings.

Do consider putting an estate plan in place including updating beneficiary designations

Consider working with an Estate Planning Attorney to put an estate plan in place. An estate plan package may include documents such as a living trust, wills, power of attorney for financial matters, and advance health care directives. Once your estate plan is in place, retitle any assets as necessary, update beneficiary designations for any retirement accounts (such as 401(k)’s, 403(b)’s, 457 plans, IRA’s, Roth IRA’s), annuities, life insurance policies, and any other contracts you have in place with a beneficiary.

Do review employer benefits

Alert your human resource department of your new marriage and request information on your employer provided benefits. There is usually a 30-day window to make changes after any major life event, such as marriage. Sit down together to review your options. It may be better to have one spouse added to the other’s health insurance plan, for example. Review and update, if necessary, the beneficiary on any employer provided life insurance policies. If one spouse has a pension, make sure the administrator has the new spouse’s information on file, if they are to be the primary beneficiary.

Do discuss separate property vs. joint property

The rules for this vary by jurisdiction and it is important to know the rules of your state before commingling any property and before changing any beneficiary wording for assets or insurance policies already in place. Discuss what you each feel should remain separate property and how you will handle joint property going forward. A CERTIFIED FINANCIAL PLANNER™ professional or Estate Planning Attorney in your state can help guide you through this process.


Don't

Do not assume your new spouse will handle the finances

We all have strengths and one spouse may be better at managing the finances. However, it is important that both spouses are aware of what is going on and involved in the decision making process. Now is the time to learn to work as a team, especially during the adjustment period as newlyweds. Set up a meeting schedule to review your finances together and stick to it. Consider setting up a filing system and get organized. By both being on the same page you can avoid conflicts and possibly counseling down the road.

Do not forget about old retirement plans as former employers

Old retirement plans with former employers can easily be overlooked or forgotten. If you have an old plan, make sure your new spouse is aware of it. Check the beneficiary designations and update if appropriate. You may be able to roll old plans into your existing employer provided retirement plan, if allowed, and if you like your current employer’s plan choices. If the old retirement plan is separate property, it may be important to keep it separate from your existing plan, and rolling it into an IRA Rollover could be an option.

Do not lose track of your expenses

Unless you have a lot of separate property or complex financial issues regarding a newly blended family, you are probably now working with one budget vs. two. It may take a few months to get comfortable with your new spouse’s spending habits. Consider using a joint credit or debit card so all expenses show up in one place. You may also want to invest in an expense tracking program such as Quicken or sign up for one of the free websites like Mint.com that track expenses.

Do not forget to review life and disability insurance

Life and disability insurance is an important part of a financial plan and shouldn’t be overlooked. For most newlyweds the loss of income is the loss of the biggest asset. If one spouse is the primary breadwinner you may want to consider obtaining a life insurance policy to insure against lost wages in the event of premature death, and disability insurance in the event of a partial or complete disability. Start with employer provided coverage then expand from there. Be sure to review beneficiary designations on existing policies and update as appropriate.

Do not leave your investments as is just because you don’t know what to do

Spend time together setting financial goals and determine your short term needs as well as long term objectives for your accounts and invest accordingly. You may want to start reviewing the investments in your accounts holistically, but this can depend if assets are joint or separate property assets. Many employers offer free investment education meetings for employees to learn about their retirement plans. There are also a lot of free online tools to research investment options. Still unclear? Some retirement plans offer money management for a fee or even better, talk to an independent CERTIFIED FINANCIAL PLANNER™ professional. You can locate one who fits your unique needs and is in your area at Letsmakeaplan.org.


Summary
Jumping cartoon

Marriage is a great time to work together as a team and get your financial “house” in order. Not only will you set yourself up for long-term success, but it is a great opportunity to bring you closer together as a couple. Track your progress and celebrate together as you reach your financial goals.


More expert advice about Finance for Couples

Disclaimer:
Laura Knolle is a CERTIFIED FINANCIAL PLANNER™ with Ballou Plum Wealth Advisors, LLC, a Registered Investment Advisory (RIA) firm in Lafayette. Laura is also a Registered Representative with LPL Financial (LPL). The opinions voiced in this material are for general information only and not intended to provide specific advice or recommendation for any individual. Financial Planning offered through Ballou Plum Wealth Advisors, A Registered Investment Advisor and a separate entity. Securities offered through LPL Financial, member FINRA (www.finra.org)/SIPC(www.sipc.org)

Photo Credits: © Deklofenak - Fotolia.com; Check Man, Cross Man and Jump Man © ioannis kounadeas - Fotolia.com

Laura R. Knolle, MS, CFP®Vice President

Laura R. Knolle, MS, CFP® is a Vice President with EP Wealth Advisors. In her role with the firm, she specializes in working with clients to bring together all the pieces of their financial lives. Her expertise includes every aspect of financial...

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