I have just under 4 months until I tie the knot! My fiance has graciously taken care of most of the planning. The remainder of the wedding planning is essentially paying the vendors, picking out wedding rings, and registering. Of course, there are some post-wedding planning issues that still need to be discussed, and I’m not talking about the honeymoon. Merging your financial portfolio, or the lack thereof, with your significant other can be a trying and confusing time. Though I’m really only guessing on this one since we have yet to determine all the specifics.
Most people think that it’s all about figuring out who spends how much, and what they spend it on. There’s actually a lot more to figuring out how to combine your finances than all of that. You have investments, 401k, IRA’s, bank accounts, CD’s, bills, student loans, mortgage(s), and probably a few dozen more financial scenarios I can’t even think of. Perhaps you currently direct deposit your paycheck into a couple different accounts, what happens to that money once you are married? What happens to those accounts, do they remain active, or do you close them? I think the sooner topics like these are discussed, the healthier the start of your marriage or life commitment will begin.
I’m by no means a relationship expert, nor should my personal finance knowledge be mistaken for the “correct” option, merely it is a plausible and possible option for you to consider. So let me begin with our process, and our decisions thus far. Our first topic of conversation was where to keep our money, which of our separate savings and checking accounts to keep, or whether we should open new ones. After all, we need to deposit that wedding money somewhere! My advice is to use at least one of your current accounts you have open now. Why, you ask? Because it’s easier. There is much less paperwork to fill out when you are simply adding your spouse to an already established account. Opening and closing accounts can be somewhat of a pain, even in this day and age. My second suggestion is that you use a bank account with the best available rates and promotions. Credit unions are great because their interest yields are higher, and their fees are considerably lower. Not to mention it’s becoming ncredibly easy to find one that you meet the requirements for membership. Credit cards are similar in nature as well. One of you may have a zero-interest card, while another may be focusing on building reward points on another. Credit card consolidation can be good for overall financial management, as well as aligning your goals and the ability to achieve them.
Investments are important to establishing security, and the eventual retirement for you both. If your future or current spouse isn’t contributing to a retirement account, get on him or her. Having to hold yourself accountable to your husband or wife can be the best financial motivator available. There are two of you now, which means you are going to need twice as much to live on in retirement. Presumably, you may want to have children at some point, which means you might be able to sock away more money now than later on in life. Lastly, I shouldn’t have to remind you of how powerful compound interest can be for your savings.
I think that most people have an innate desire to save money for a comfortable retirement. I also think that most disagreement and issues stem from the income disparity the two of you may have, and your new amount of disposable income available. One person may come into the relationship with a mortgage payment, and the other may come in with a ton of student loan debt. One may be driving a used beater car into the ground, and the other a brand new BMW with all the trimmings. Even if the differences aren’t that glaringly obvious, chances are if you look hard enough you will find something that doesn’t quite match up. The specifics on how to handle the disparity isn’t as important as the idea of introducing compromise into the final decision. Find out early on who will be responsible for paying for old debts, larger expenses, housing payments, etc. Have an idea on how your disposable income will be split amongst the two of you, and even what account that money will be kept in. Something as tedious as consolidating your car insurance companies can cause issues if they aren’t dealt with properly. In the end, the greater the detail that goes into your financial planning will pay off in other ways. Financially responsiblity, and the peace of mind that comes with it can only help you both to live a happy and healthy life, together!