The big day you've been dreaming about your entire life is finally here. It’s time to walk hand-and-hand with the person you're going to spend the rest of your life with and tie the knot. Your only concern is that there are no major hiccups on your big day: but getting married brings big and unfamiliar changes for both you and your new spouse. Newlyweds want to start their married lives on the right foot and in the right direction. Working to understand where your new spouse stands on key financial issues can not only strengthen your new family’s financial situation, it will help lay the foundation for a relationship built to last. Here are a few areas to focus on when you are recently engaged or married:
Get on the same page
Everyone grows up with some idea of how they see their life unfolding. As you near major milestones like an engagement or marriage, this idea becomes clearer than ever. Take the opportunity to share your dreams, goals and vision for the future with your significant other. The key is open communication! This a time to learn, understand and establish a plan that will work for both of you. It’s important to set goals and expectations early on to avoid arguments or surprises down the line.
Create a snapshot of your current situation
People getting married tend to put blinders on, wanting to solely focus on the big day. However, failing to make sure that the rest of your life is in order is a mistake. Now is the time to get out the paperwork that was shoved into boxes and forgotten. Getting an idea of your net worth (total assets minus liabilities) is a great way to evaluate what you have right now to determine what needs improvement. Remember: assets include savings, checking, retirement accounts, real estate and collectibles while debts include school loans, credit card debt, mortgages and auto loans. Determining your financial status today will help you look back in 1, 3 or 5 years from now to gauge the financial progress you have made.
Set a budget
Monitoring your income and expenses can help you increase your net worth. There are many budgeting templates online or if you are tech savvy, check out GK’s My Money Page app on your iPhone to help you budget. Start with a realistic savings goal for each month and make sure that strategy works for both of you. Your goals will be hard to reach unless you’re in total agreement. With help from a financial planner, then determine how much you will be expected to save in order to meet the goals that you previously discussed. I encourage putting away a minimum of 10% of your gross pay into your investment accounts (this includes retirement & medium term accounts.) Ideally, being able to save 20%-30% of your gross pay is an excellent goal to have.
Protect your new family
Regardless of whether or not children are apart of the equation, a new family unit is created the moment vows are exchanged. The most important thing newlyweds can do is to make sure they are fully protected in case a traumatic event occurs within your family. This includes making sure you have the proper life, health, disability, and long-term care policies in place for protection. If you already have some of these items set up, it’s still important to review your plans with your advisor to make sure they still fit your current situation. The last thing you want to do is build up your assets over many years, only to see them deplete in a matter of days from an unforeseen accident. Working with a financial planner to calculate your exact insurance needs can ensure you and your spouse have the appropriate types and amounts of coverage to safeguard your family against a rainy day.
Like with any major life event, there are many moving parts with an engagement or new marriage. Working with a financial planner can help simplify and combine your financial lives into one, comprehensive plan. By easing your financial stress, you can get back to enjoying this new chapter with your significant other.
By Nicholas Licouris
Investment Advisor Representative
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which course of action may be appropriate for you, consult your financial advisor. No strategy assures success or protects against loss.
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