Wedding season is just around the corner, and couples who will be tying the knot may be looking for advice on how to manage their finances both before and after the big day. According to Patty Steinbach, wealth management advisor at First Bank, financial planning before the wedding can prevent a financial fiasco afterwards. Here are some tips she offers to couples:
Plan for Planning
- Share your personal financial situation with each other to eliminate unwanted surprises later. Outline your financial goals as a couple, including debt repayment, retirement planning, home purchase, vacations, etc.
- Set a time each month to talk about income, bills, investments, etc. to ensure that financial discussions become routine and both spouses stay involved. Assign financial tasks according to each person’s strengths.
- Consider merging accounts to save on fees rather than keeping separate accounts.
- Decide on a spending limit before discussing purchases.
Prepare a Family Budget
- Estimate your joint income. You may need to adjust your W-4 forms with your employers to provide adequate withholdings for income taxes.
- Estimate your monthly expenses, including any debt repayment you may have. Hopefully, you will have enough disposable income to “pay yourself first” by maximizing pre-tax retirement contributions.
- Depending on your income and age, you may want to seek tax advice about the benefits of Roth IRAs. After this, talk about how to save for an emergency fund, investments, home, vacations, etc.
- Research your health and automobile insurance coverage to avoid overlaps or gaps. It may be cheaper to be covered under one policy.
- Check to be sure you are only carrying one renter’s or homeowner’s policy that is adequate to protect your combined household goods, including coverage for jewelry, computers, etc.
- Consider purchasing disability insurance to protect your income stream in case of disability, and life insurance to provide security for your spouse upon your death.
Draft an Estate Plan
- Make an appointment with a local attorney who specializes in estate planning to put documents in place and to protect yourself and your spouse.
- Consider a will or trust, depending on your particular situation. Be sure you also have durable powers of attorney and healthcare directives.
Make Name and Beneficiary Designation Changes
- If you are changing your name, be sure to update your social security card, driver’s license, other IDs, records and important documents.
- Review the beneficiary designations on all IRAs, pension accounts, bank and investment accounts, as well as disability and life insurance policies. iBi