June is a popular month for weddings. If you’re getting married, you have many exciting details to discuss with your spouse-to-be.
But after returning from the honeymoon, you’ll need to discuss your finances. Couples who quickly “get on the same page” regarding their financial situation are taking a step that can help them immensely as they build their lives together.
Cover these areas:
• Separate or joint checking/savings accounts: Some couples create joint checking and savings accounts; others keep everything separate; and still others find middle ground — joint accounts along with smaller, separate accounts. Whichever method you choose, make sure you’re both aware of where your money is, how it can be accessed, and by whom.
• Debts: You and your spouse may be bringing in debts, such as student loans or credit cards, to the marriage. You don’t necessarily have to do everything possible to get rid of these debts immediately, but you should set up reasonable payment plans that will allow you to lower your overall debt load so you can free up money to invest for the future.
• Spending and saving: Newlyweds are often surprised to discover how different they are from each other in the area of spending versus saving. You both need to know your spending and saving decisions have greater consequences than when you were both single. If one of you is more of a spender and runs up big credit card bills, it can affect both of you. Communicate clearly with each other to avoid these problems.
• Goals: Do you want to purchase a house? If so, when? If you’re going to have children, will you want to help them pay for college? When do each of you want to retire? And what sort of retirement lifestyle do you have in mind? By answering these and other key questions, you’ll be formulating a set of goals. And from there, you can devise a strategy for attaining these goals.
• Investment styles: You and your spouse will need to invest if you are going to achieve a comfortable retirement. However, each of you may have a different investment style — one of you might be willing to take more risk for the possibility of greater returns; the other is more conservative, ready to accept lower returns in exchange for greater preservation of principal. To pursue your strategy for reaching your objectives, each of you may have to compromise on your “investment personality.” To achieve this balance, you may need to consult with a financial adviser.
Finances are an important part of marriage. By communicating regularly and working together, you and your spouse can build a solid financial foundation.
Joe Faulk is a financial adviser.