A Newlywed’s Guide to Financial Success

By Jason Silverberg, CFP^®, CLU^®, ChFC^®

 

As we travel through the adventure of life, we encounter many pathways to obtain our financial goals. Some avenues lead us straight to where we want to go, while others lead us astray and into valleys of despair. As we get married and start a family, we become a team and join forces. At this point, it’s critical that both partners agree on where the path will lead, as well as which route to take to get there. Here are 7 tips to use as a road map to guide you on your quest for financial success.

 

1. Talk about money

Men and women have different communication styles. Marriage is about bridging those gaps and coming together in mutual understanding. Just with everything else, communication is key, especially about money. Even before the marriage, it’s a good idea for each partner to disclose to the other all of their assets and debts.

As time passes, and you fall into a groove, be sure to keep the lines of communication open. Encourage each other to create good financial habits. Paying bills is a great activity to do together, so both partners know the process and the underlying inflows and outflows. This is a great opportunity to discuss what to do with any excess leftover.

As major purchases spring up, make sure you both consult each other before buying. Come up with a minimum dollar amount that works for each of you, so that there aren’t any miscommunications. A lot of hard feelings can be created because one person made a large purchase without the other partner’s knowledge.

Prepare an annual financial summit once a year. It can be as formal or informal as you’d like. Just make sure that you talk globally about what each partner would like to see happen over that year. Maybe one person wants to reduce their debts, while the other spouse wants to save for a new home.

 

2. Inform the government

One of the first things that should be done as a joint unit is to inform the government of your new nuptials. Be sure to inform the IRS of any name changes and apply for a new social security card. Also, changing your driver’s license is a good idea too.

Check in with your financial institutions as well. They might need copies of your marriage certificate to change your name on your accounts as well as beneficiary designations on Retirement Accounts, Life Insurance, and Trust documents.

 

3. Prepare a Budget

Have you ever heard of the term, “Pay Yourself First?” This is the concept of treating your savings as if it were an expense. Many people spend down their income and save whatever is left over. Most times, there isn’t much left after you’ve paid your bills. The true way to know that you are saving is to pay yourself first.

In order to figure out how much feels right, create a budget. Simply track your expenses over a few months and watch how much income comes in and the expenses that go out. Make a list and subtract the expenses from the income.

If you are really disciplined, you can challenge yourself to cut back on some unimportant expenses that might distract you from hitting your financial targets. Instead of the fancy Starbucks drinks, try brewing your own coffee. Brown bag your lunch once a week to see how that feels. Then, try doing it twice a week. You can see where this is going.

Also, be sure to pay your bills on time. By staying disciplined and holding yourself accountable, you’ll stay clean with the credit bureaus and avoid the pitfalls of getting into credit card debt. Sticking to a budget is one of the cornerstones to understanding your current financial position and opens your eyes to the possibilities of where you can go with your financial lives.

 

4. Joint accounts

To keep things simple in your financial household, a joint account could be a good idea. This way, as bills become due, there is one spot where money can be drawn from. It’s a lot easier than having to two individual accounts.

This will also help for estate planning purposes, where the underlying account is owned by both parties. There are variety of ways that you can title these accounts, so be sure to check in with your advisor or estate attorney to ensure that you’re setting them up correctly.

 

5. Review your Insurances

As you both take the next step and begin your family, one of the most important aspects of your financial situation is your insurance protection. Make sure you tell your auto and home/renters insurance company that you are now married. They can put you both on the same policy and reduce some costs. Also, make sure you evaluate each other’s health insurance plans through work. Select the one that provides the most coverage for the least cost.

Life insurance coverage is also very important. Discuss a plan for what would happen in the event either of you were no longer around. This is not something many couples want to discuss, but it is crucial to making sure that you both have adequate protection. Contact a financial advisor to help create a strategy that fits your needs.

 

6. Prepare your Will

Just as you should be evaluating your life insurance needs, it is also important to prepare your will. Anytime you have a major life change, amending your will is vital to making sure that your plans are carried out. If you die without one, your state will provide an order to distribute your assets for you, but you may not like how they will do it. Also, don’t forget the Advanced Medical Directives which include your living will, power of attorney, and health care proxy, each making sure that if you cannot make decisions on your own, then your wishes will be carried out.

 

7. Consult a Financial Advisor

As you come together to build your family, you both might share different viewpoints on the role that money plays in your life. Some feel that money is a means to an end, while others believe that money makes the world go round.

Whatever your viewpoint, be sure that you and your partner understand each other. Consulting with an unbiased third party to discuss your feelings toward finances may help you start your marriage off on the right foot. It’s a good idea to share your experiences and your goals, so that you each can guide the other throughout your journey together.

A financial advisor can also act as a coach as you move closer and closer to your financial life goals. They can also be a good Third Party to provide advice and guidance. Be careful not to hire an advisor and use them as a marital counselor. If you are having problems with your spouse, find an appropriate venue to have these conversations.

Whatever your financial personality looks like, just make sure that you and your partner are communicating, creating good financial habits, and working together towards a common goal.

 

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In my book, The Financial Planning Puzzle, I discuss these lessons as well as other valuable information as your fitting your financial pieces together. Buy the book now on Amazon.com here.

If you’d like to discuss your own personal finances, you can email me directly at jason@finadvinc.com or call me at 301-610-0071.

 

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Jason Silverberg CFP^®, CLU^®, ChFC^®, specializes in compressive financial planning. His practice aims at helping families and small business owners to fit their financial pieces together to create financial freedom. He uses a values-based process to connect with his clients on a deeper level than some advisors, diving into the why behind the numbers. He focuses on helping clients achieve and protect their goals through methodical investment strategies and calculated risk management and insurance solutions. Jason is a registered representative and investment advisor representative of Securian Financial Services, Inc. Member FINRA/SIPC. Financial Advantage Associates is independently owned and operated. Life insurance products contain fees, such as mortality and expense charges, and may contain restrictions, such as surrender charges. Financial Advisors do not provide specific tax/legal advice and this information should not be considered as such.  You should always consult your tax/legal advisor regarding your own specific tax/legal situation.

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