(If you’d prefer to listen to this article, you can get a podcast version of this post here: Money and Marriage Podcast Episode 145 – Newlywed Finances: 35 Tips for Couples Tying the Knot)
As we head into the fall wedding season, it’s time to talk newlywed finances.
But before we get into the details, a quick shoutout to all of my readers who are already married.
You might be tempted to skip this article entirely. “If this article is about finances for newlywed couples, it’s probably not relevant to us,” I hear you saying to yourself.
Wrong.
I am intentionally providing a list of tips for newlywed finances that is so lengthy that I am willing to bet that every couple – whether you’ve been married for one day, one year, one decade, or longer – can find at least five action items from this article.
Even if you’re getting married this year, it’s probably too much to work on all of these things at once. Pick a few to work on with your spouse, get them done, and then move on to other items.
And if you ever want a comprehensive financial plan designed specifically for couples that addresses all of these items, and more, you can book a free breakthrough session with me whenever you’re ready.
(Note: I know there’s a lot of content here. To help you sort through everything, I’ve broken these 35 tips into a handful of categories.)
Set the Stage for Newlywed Financial Success
1) Take one hour to put all of your cards on the table. Make sure you fully disclose your entire financial picture to each other to start your marriage off on the right foot.
Ideally, you will use an account aggregator to have one central place where all of your account balances are up to date in real-time. But, a shared Google sheet will work just fine, too.
Sometimes, this is an incredibly easy step for couples to take, and in other cases, it’s one of the hardest discussions you’ll ever have. If you need a facilitator for this conversation, I encourage you to book a free breakthrough session with me.
2) Double-check your work. By the time this process is complete, there should be no secret or hidden financial accounts or debts.
It’s OK if you have some separate accounts that your spouse can’t log into, but you both should have a way to see the entire financial snapshot for your family to minimize the risks associated with financial infidelity down the road.
3) Explore your money histories. Most of the ways we manage money develop as a result of how we were raised. To help you put yourselves in the others’ shoes to reduce money fights down the road, I encourage you to discuss the following questions with each other:
- What’s the first memory that you each have about money?
- Growing up, money was _______.
- What did you learn about money from your parents/guardians? How open were they with you (and each other) about money?
- Who taught you about money growing up?
4) Decide if you’re going to stay on separate health insurance policies, or combine plans. You have sixty days after you get married to make a change to your health insurance situation, or you’ll need to wait until your next open enrollment period.
Don’t just compare the cost of the policies when making your decision; consider the benefits and coverage levels as well.
5) If you make changes to your health insurance, don’t forget to adjust your Health Savings Account contributions, if applicable. There are different annual maximum contributions depending on how many people are on your health insurance plan.
6) Consider completing a money script assessment to identify your ‘blind spots’ when it comes to your financial differences. If you email me and include your spouse’s email address, I’ll send you the money script assessment that I use with my clients.
7) Discuss the financial boundaries you want your family to have, particularly as it relates to your parents, in-laws, siblings, and other extended family members. I’ve seen several cases over the years where a parent or in-law is inappropriately involved in trying to manage the family’s finances, and I’ve seen even more cases where one spouse is loaning or giving money to an extended family member where their spouse is at least a little uncomfortable about it.
If you can draw these boundaries proactively rather than reactively, it can help you avoid issues down the road.
8) Identify your “eggshell” issues, and lay the groundwork to implement a plan to handle these issues in the first few years of your marriage.
“Eggshell” issues are the difficult, thorny topics in your relationship that often lead to arguments; issues, in other words, that lead you to feel like you’re walking on eggshells when they come up.
You’re not going to fix these issues overnight, but it’s critical to have a plan to address them down the road. (Note: these may be financial, or completely unrelated to finances.)
Foundational Newlywed Finances
9) Create your family mission statement. Draft a few bullet points that define your family’s most important values and priorities that you can use as a North Star to guide your future decision-making.
10) Identify specific financial goals that are in line with your mission statement. Take some time to dream about your futures together, and create financial goals for your new family that will help you to achieve these dreams.
The best financial goals have dollar amounts that can be measured on a monthly basis. For example: “We want to buy a $500,000 house in two years with a 20% down payment, so we will save $4,166 per month in our down payment savings account.”
11) Decide on your account structure – are you going to combine all of your accounts, combine none of your accounts, or use a yours/mine/ours account structure? I did a deep dive into how to approach this decision in episode 131 of the Money and Marriage Podcast.
12) Do you want to make any changes to your credit card structure? Do you want to add each other as authorized users to each others’ credit cards, open new joint cards, or not make any changes at all?
I list this separately from the question about combining accounts because there are unique factors to consider when making changes to your credit cards. Specifically, you should consider the impact that changing your credit cards will have on your credit score and decide whether or not now is the right time to make these changes.
Even if you decide you want to combine all of your newlywed finances, you may decide to postpone making changes to your credit depending on your situation.
13) Likewise, review your credit scores and reports together. This is a good idea if only so you know how you each stand when it comes to credit to help you make informed decisions when you need your credit down the road (ex, when you apply for a mortgage.)
But it’s also a good idea to review all of your open lines of credit to look for any errors or fraudulent accounts.
14) Set your monthly savings target – aka, create your budget. We just did a deep dive into this process in the last episode of the podcast – you can read a deep dive on how to do this here.
15) Come up with a plan to handle any debt that you brought into the marriage. This is often the most difficult newlywed finances conversation because of the emotions involved in a topic like debt, depending on how much debt you have and how much debt is in each of your names. Again, we recently did a deep dive into this issue on the podcast.
16) Have a discussion about the role you envision debt playing for your family in the future. This is a different conversation than the discussion about how to handle your existing debt, and it’s typically the easier one to have. (So, you might want to start with this one, and then go back to the question about your existing debt.)
Is debt a tool you intend to use as a family when you buy cars or do home upgrades? Or, does debt scare you, and is it something that you never intend to use in the future (outside of a mortgage on your primary residence?)
If you discuss these questions in advance, it will help guide your future decisions down the road.
17) Tax filing status – decide if you intend to file your taxes jointly or separately during your first year of marriage, knowing that you can always re-run the numbers when it’s time to file to confirm your decision.
18) Tax planning – in reviewing your family’s financial situation for the current tax year, review if there are any specific tactics you can employ between now and the end of the year to reduce your family’s tax bill for the year.
This is one of my favorite ways to help clients generate a return on investment in working with me – click here to learn more.
19) As you make financial decisions, keep an eye on how you expect your financial situation to change in the next few years.
For example, I sometimes see couples buy houses based on their income and expenses in their first year of marriage, and then realize after they have a baby that they didn’t build in sufficient wiggle room in their budget to add child care down the line.
20) Do a little bit of retirement dreaming. You don’t need to spend a ton of time on this while you’re in the first half of your career, but I encourage you to start thinking about what you want your retirement to look like so that you can prepare accordingly. If you know you’ll want to buy a vacation home in retirement, for example, you’ll need to save more aggressively than if you’ll want to downsize.
Your answers can and will change, and it usually doesn’t make sense for retirement to be the dominant focus of your newlywed finances. But, it’s a good idea to start the conversation early.
Communicate, Communicate, Communicate
21) Set financial communication ground rules for any money conversations you have going forward. Here are a few suggestions:
- When you’re talking about money, listen to understand your spouse. Paraphrase back what you hear them saying to confirm that you aren’t misinterpreting anything.
- Decisions are made together, even if we divide up the responsibility to execute certain tasks.
- Create a “no shame, no blame” family culture when it comes to money
- Avoid the Four Horsemen communication patterns at all costs
22) Schedule 30 minutes on your calendar to have a family Monthly Money Meeting. Ideally, this will be at the same time every month (ex: at 9 PM the first Wednesday of every month).
During this time, you will celebrate your financial successes, review your savings progress from the prior month, make tweaks to your budget as needed, set savings goals for the month ahead, and do any financial management tasks you need to do to close out the previous month.
23) Diivy up financial tasks. Decide who’s going to pay the bills, manage your investment accounts, and everything in between.
And especially if you’ve never managed any aspect of your finances together before, it’s a good idea to talk through the nuts and bolts of how you’re used to managing your finances so that you both know what to expect from each other, and so you can decide how to manage money together in a way that works for both of you.
24) Start to have discussions about financial and investment risk. As you start to build wealth, more and more of your money will be invested. Do big drops in the stock market bother you, or do you view them as opportunities to buy more?
25) Answer this question together: “What’s the most money you’d be ok with me spending without discussing it with you first?” You don’t necessarily need to have a hard and fast rule about this… but having the discussion can help you avoid issues down the road.
Nerdy Newlywed Finances Stuff
26) If your marriage involves a name change, make sure to “run through the tape” in making the change. Often, I see couples who get the process started by getting a new social security card and ID, but then they don’t update their bank accounts, auto insurance, and so on. If you start the process, make sure to finish it!
27) Update your addresses with all of your financial institutions.
28) Update your tax filing status with your employer so they can adjust your withholding.
29) Cancel any duplicate expenses you have. I’m not a big fan of managing your budget on a transaction level, but in the first year of your marriage, it’s a good idea to review every line item to make sure you’re updating your recurring expenses as needed.
30) Update beneficiaries on your financial accounts so that if something were to happen to you, your money will go to your spouse.
Particularly for retirement accounts and life insurance policies, this will not happen automatically if you’ve named someone else the beneficiary on your accounts in the past.
31) Review your auto, homeowners, and renters insurance coverage levels and make changes to your policies as needed.
Pay especially close attention to how much personal property is covered on your renter’s insurance policies – this should be updated regularly to make sure that if you ever have to file a claim, you can replace your belongings. This is often an overlooked component of newlywed finances, but it’s an important one.
32) Do you need life insurance or disability insurance? This is particularly important once you have kids, but you should review your insurance needs in each of these areas whenever you have a major life change.
33) Get a basic estate plan in place. Decide if you want to use a will- or trust-based estate plan, and get something in place ASAP. You can always “upgrade” estate plans down the road.
34) If your spouse has private student loans and a parent or relative is a cosigner on these loans, contact your loan servicer to request that the cosigner be removed, or attempt to refinance the loans.
There are a number of risks associated with having cosigners on your private student loans, so I always advise people to remove cosigners if at all possible.
And Last But Not Least…
35) Make sure you take some time to celebrate the things that are going well for you financially.
Too often when we talk about money, we focus on the negative. It’s easy for our financial conversations to gravitate toward the areas where we feel anxious, embarrassed, or guilty.
But don’t forget to celebrate how far you’ve come on your financial journey. If you complete as many of the newlywed finances tasks in this article as you can, you’re going to look back in five years and be amazed at how far you’ve come. If you want help checking your financial blind spots and getting a plan in place to help you and your spouse prepare for the journey ahead, I encourage you to schedule a free breakthrough session with me whenever you’re ready.