YOU'VE FINISHED UNPACKING FROM YOUR HONEYMOON and started working your way through all those thank-you notes. But have you started talking about the part money will play in your life together? Here are six tips that could help you get closer to happily-ever-after—financially.
1. Share Your Deepest Secrets
You've exchanged vows. Now trade financial statements (if you haven't already), from income and debts down to what you spend on that daily coffee fix. Begin by tallying up what you own—and owe. Your assets should include things like your savings and retirement accounts. Your liabilities may include student debt, a car or business loan, credit card balances and possibly even a mortgage.
"When you marry someone, you may also be taking on their debts."— Debra Greenberg, Director of Personal Retirement Strategy and Solutions
Why is this important? "When you marry someone, you may also be taking on their debts," says Debra Greenberg, director of Personal Retirement Strategy and Solutions at Bank of America Merrill Lynch. You may be able to help pay down your partner's debt more quickly. But even if you can't, it's better to know about any surprises that could have an impact on your own finances down the line (a bad credit score could become a roadblock if you apply jointly for a mortgage).
After everything's on the table, start talking about where you hope to go from here. If one of you already owns a house, will it be right for both of you? Are either (or both) of you planning on continuing your education? Do you have enough insurance to create a financial safety net should something happen to one of you? Whose health care and other work benefits will better serve both of you?
2. Embrace a Budget
Figure out how you'll manage costs, from ramen noodles to retirement. Even if you both work, you may not want to divide the bills down the middle. "If you have the higher salary, you might take full responsibility for the housing costs, and your spouse could cover the other monthly expenses. You might also contribute a larger percentage of your income to your retirement fund," says Greenberg. "Both of you, however, should try to contribute the maximum to your retirement accounts to make sure you receive any matching benefits."
Maybe you're willing to take some chances, but your spouse prefers to stick with a slow and steady approach.
When it comes to managing your daily finances, talk about what makes you both comfortable. Some couples find joint bank accounts easiest to deal with. But if you've been managing your money for years on your own, you may prefer to keep individual accounts—and contribute to a joint account for larger purchases.
To help you keep track of your spending, income and net worth, you could look into any number of budget-tracking apps. Merrill Lynch clients can take advantage of a service called My Financial Picture. This online program makes it easy for you to look at and monitor the assets you have individually and together. It captures all of your bank, brokerage, mortgage and loan accounts—even the value of your real estate and other assets, like artwork or jewelry—in one place.
3. Explore Your Compatibility—As Investors
Your attitudes about money and investing may differ in key ways—and you may need some help sorting things out as you plan for your future. Maybe you're willing to take some chances for the potential promise of a higher return, but your spouse prefers to stick with a slow and steady approach. That's okay—your different financial styles may even complement one another. You just need to be upfront about it and think about how the investing decisions you make today could affect your financial security later.
For those who aren't quite sure about the level of risk they're comfortable with or what they're investing for, Merrill Lynch offers an Investment Personality Assessment. "It's a list of targeted questions that can help couples understand their attitudes toward money, investing and their goals," Greenberg says.
4. Be Mindful of Your Taxes
Find out how filing jointly may affect your finances. Maybe you could get away with putting off your taxes until the last minute when you were single and filing as an individual. Now that you're married, it's a little more complicated. Make some time in the first year of your marriage to talk with a tax professional about what to expect. It might also be a good idea to review your investment choices and find out if there are any tax-efficient steps you might consider taking.
5. Update Your Will and Other Legal Documents
(Your dog probably shouldn't be your primary beneficiary anymore.) As premature as it might seem to young newlyweds, this is a smart thing to do—and it isn't complicated. Life can surprise you sometimes, and you want to make sure that your spouse is the one designated as the beneficiary in your will—if that seems appropriate—along with other key legal or financial documents, including insurance policies and retirement accounts. When you neglect to update this information, your assets might not go to the person you’d like them to.
6. Review and Recommit, Yearly
Nothing's set in stone. "All the plans you make in your first year of marriage can be quickly upended by new jobs, new expenses and new babies," says Greenberg. "From time to time, it's healthy to take another look at your financial commitment to each other. You'll probably want to make a few changes along the way."
Think about making this an annual exercise. To help you remember, you might want to choose a specific date that has a special meaning to you—like the anniversary of your engagement—to review how far you’ve come financially as well as personally, and to figure out whether there are any adjustments you want to make.
3 Questions to Ask Your Advisor
- How can the Investor Personality Assessment help us understand each other’s financial styles?
- Which ways of paying off debt could make sense for us?
- What can we do to begin planning for short-term goals like buying a home?
Connect with an advisor and start a conversation about your goals.
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Neither Merrill Lynch nor any of its affiliates or financial advisors provide legal, tax or accounting advice. You should consult your legal and/or tax advisors before making any financial decisions.