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10 Financial To-Dos Before Your First Wedding Anniversary

Planning your financial life with your spouse can be very stressful. Here are ten considerations you should talk about before reaching your first anniversary.

Articles by sherrillstgermain

By Sherrill St. Germain
Financial Columnist, Betterment  |  Published: May 29, 2019

Having an open discussion with your partner about your financial situation, aspirations, and habits are essential first steps to take before your first anniversary.

Whether it’s your first wedding or your fifth, being proactive about your combined financial plan and being aware of where you can save money can put the two of you on the path to affording the shared life of your dreams.

All you need is love, sang the Beatles. Sonny and Cher were warned their love wouldn’t pay the rent. But when it comes to money and matrimony, perhaps Cyndi Lauper said it best: money changes everything.

If your goal is more “for richer” and less “for poorer,” what financial to-dos should you check off before your first anniversary?

Document the financial state of the union.

In a perfect world, you and your beloved have been talking about money at least since you decided to tie the knot.  If not, job #1 is full disclosure. Unromantic as it sounds, an honest view of your combined financial situation is essential to making the most of your money as a couple. That includes:

  • Assets and liabilities
  • Income and expenses
  • Credit score and history
  • Savings strategies
  • Employee benefits

Discuss the softer side of money.

Your financial success as a couple is not solely a numbers game, so be sure to talk about the less quantifiable aspects of money management.

  • Risk tolerance
  • Successes and challenges
  • Money attitudes
  • Relationships with financial professionals
  • Interdependencies with other family members

Lay a solid foundation.

Your next priority is setting yourselves up to withstand the inevitable bumps in the road. Do you have an emergency fund of three to six months of combined living expenses? Since two might live as cheaply as one, you could be sitting on extra cash that might be put to better use.

A healthy emergency fund will only take you so far if it’s offset by unmanageable debt. If either of you has high-interest rate debt or a poor credit record, make fixing that a top priority of your financial plan.

Check your insurance coverage.

Changes to living arrangements call for reevaluation of home, auto, and umbrella insurance policies. Life, disability, and long term care coverage also bear review. Be sure coverage amounts, deductibles, and waiting periods match your new circumstances. Also, find out if you’re eligible for family discounts.

Talk about death…

It’s important for new couples to come up with an end game. That’s especially true if this isn’t your first walk down the aisle, and you’re balancing the needs of a blended family.  So update your estate plan, as well as beneficiaries on any accounts that pass outside the estate. Unless you want your ex to end up with your IRA.

…and taxes.

One thing’s certain: your new filing status will change your tax situation. That might mean a new W-4 to adjust income tax withholding. Or it could mean big planning opportunities, particularly if your wedding coincides with a job change, new baby, or other life events.

To get an idea of what to expect, run a combined tax projection or work with a financial professional.

Capture free money.

Besides tax breaks, another likely source of free money is employee benefits, so check that you’re making the most of yours. For example, if one spouse has a better 401k or isn’t receiving the full employer match, consider directing more retirement savings to that plan.

Review allocations to flexible spending accounts, employee stock plans, and Roth vs. traditional 401k in light of your combined finances. And don’t forget to compare medical, dental, and vision plans to see if one of you can get a better deal by switching.

Dream a little dream for two.

With that key infrastructure in place, next comes the fun part: putting your money to work funding your dreams. That starts with visualizing what you– as individuals and as a couple– would like your money to do for you and your family.

This list might include things like pay off debt, start a family, retire early, or travel the world. That’s a great start, but aim to refine your goals to be as specific and measurable as possible:

  • Pay off $7,000 credit card balance before 2019 ends.
  • Buy a $400,000 home with 20% down in 3 – 5 years.
  • Pay for 50% of the kids’ costs to attend a public university.
  • Retire at 55 with annual living expenses of $65,000 + $7,500 travel budget.

Write up a plan and start implementing.

Once you’ve inventoried your combined resources and goals, you are in a position to come up with a financial plan. Like any good plan, it should address who, what, when, where, and how.

  • Will you merge finances, keep them separate, or something in between? Who will be responsible for which tasks? How will you keep each other up-to-date?
  • What financial institutions and professionals will you work with? It may be difficult to let go of existing relationships, but keep in mind potential cost savings from streamlining accounts.
  • Evaluate your cash flow. If income exceeds expenses, where will you direct the surplus cash flow to best meet your goals? If not, what expenses will you cut?
  • Is your portfolio allocated in a way that matches your combined goals, timelines, and risk tolerance? Is it cost-effective?
  • Determine the actions needed to get your money working toward your goals.

This first plan will likely be the personal finance equivalent of what writers call a “crappy first draft,” even if you’re working with a financial planner. Don’t let that deter you. Even if you’re 100% wrong about your first year of money in marriage, you’ll learn so much in contemplating it, you’ll be better positioned to respond as events unfold.

So just take your best shot and get started.

Schedule next year’s financial review.

Plans are worthless, but planning is everything. –Dwight D. Eisenhower

Your newly minted financial plan provides a roadmap to get you moving in the right direction. But it won’t be long before time renders it worthless. That’s to be expected, because change happens and new information comes to light constantly.

The greatest rewards go to those who consistently course correct to accommodate that change. So put next year’s financial review on the calendar now and make a commitment to check in at least annually.

After “I do,” it could be the most precious vow you’ll ever make.

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