Planning a wedding comes with a lot of to-do’s, checklists and unwarranted advice from your nearest and dearest. On top of finding a venue, booking a caterer and avoiding your mother-in-law’s incessant questions about the seating chart, soon-to-be newlyweds have to get their financial health in order.
Whether you’re tackling your finances before tying the knot or saving it for your first month or two together, you’ll want to heed the following advice about financial planning for your first year of marriage as a newlywed couple.
1. Make sure you have common goals
Talk about your goals, specifically the ones that have to do with large chunks of money (buying a house, taking an annual vacation or investing in a timeshare, planning for retirement). If you want to think far into the future – and we think you should – make sure to take will and estate planning into consideration, too.
It’s never too early to plan for the unexpected, and if you handle the nitty gritty now, you won’t have to do it later on down the line.
2. Don’t hide anything financial from each other
To start off – and continue – on the right foot, never hide anything financial from one another, including how much debt you have, the amount you bring home every week from your job or how much money you have in your savings account.
You also should never keep your spending a secret. Even if you’re going to keep your pocket money separate, make sure you’re both clear on what’s yours to spend and what income is going to be shared.
Now is the time to disclose any student loan debt you might have and make a plan to pay it off.
3. Consider getting a prenup
If you’re not yet married, consider getting a prenup. While this may bring up a deeper conversation about commitment and longevity, the true purpose of a prenup is to protect both of you in case the unexpected happens. When approached as a smart business transaction instead of a statement about your relationship or love for one another, it can ease a lot of finance-related tension before a wedding.
In addition to protecting you in case, you end up divorced, getting a prenup also presents you both with the opportunity to lay all of your finances on the table in front of one another, which is a smart and necessary move whether you have a prenup or not.
4. Create a budget together
Even if both of you are responsible with money, you’ll need to start from scratch in order to create a budget together. This is one of the most important tips you can learn for your first year of marriage. You’re going to have more money to contribute to your bills, but you also may have more or higher bills to start paying, especially if your home payments or savings goals have drastically changed. What’s worked for you in the past as a single person isn’t necessarily going to work for you in your future together.
Write all of your expenses down, list your various income streams and come up with a joint budget, which should include who will pay for what, which accounts will be used and payment schedules.
5. Keep your retirement accounts separate
By the time you get married, both of you will probably have your own retirement accounts. However, if one of your retirement accounts is better than the other, it can be tempting to create a joint account instead of keeping them separate. This isn’t a good idea, though.
Should you get divorced, one of you will be stuck without a retirement account at all. Keep them separate no matter what. If possible, the person with the not-so-great retirement plan can consider switching to something better.
6. Decide who has the better insurance plan
One of the best things, finance-wise, about getting married is being able to choose the best insurance plan available to you. While you may find that it works in both your favors to remain enrolled in individual plans, it’s more common for one person to have the better plan and then to include their spouse under that one.
Compare coverage as well as cost, and make sure you account for adding a person to the plan, which will change how much it will cost you.
7. Set Up an emergency fund
Even if you’re both low-earners at the moment, you should prioritize an emergency fund. Should one of you lose your job, have your car fail on you or need to go to the hospital, you’ll have some savings to dip into. Don’t depend on a credit card for an emergency – the emergency could be a problem with your credit card, which is why it’s important to have your own cash in a separate savings account.
This list can be overwhelming, and while it’s important that you take your finances seriously, it doesn’t all have to be done in a day. Make a list, set days and times to sit down together to figure it out. Before you know you’ll have as happy a bank account and financial future as you have a new life together. Enjoy your first year of marriage together!
What financial advice do you have for newlyweds?
What was the most difficult obstacle to overcome your first year of marriage?
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