A Post-Nuptial Financial To Do List Guide for Newlyweds
Here are 7 things every newlywed couple should do
Getting married can be equally parts excitement and stress, especially if you're navigating discussions with your spouse-to-be about merging your finances. How you talk about your finances as newlyweds can set the tone for a lifetime of wedded financial bliss. Whether you're 19 or 90, there are a number of money chores to tackle once you tie the knot and having a clear financial to do list can make managing them easier.
1. Change Your Beneficiaries
One of the first things to do after getting married is review and update your beneficiaries on key financial accounts. That includes your investment accounts, savings accounts, 401(k) plans or similar employer-sponsored retirement accounts, IRAs and insurance policies (life, health, auto, homeowners). Your beneficiary designations should ensure that your new spouse inherits these assets if should something happen to you. Though you can also designate those assets in a will, keeping the beneficiary information up to date is the easiest way to have those assets transition smoothly to your spouse when you pass away.
2. Make a Will or Update Your Existing Will
If you have a will, you also need to include updating it on your financial to do list and adding your spouse as a beneficiary. And if one or both of you has yet to write a will, that's something you'll want to do sooner rather than later. If drafting a will is new financial territory for you, this article on Why You Need a Will can help. If one or both of you is bringing considerable assets into the marriage, it may be a good idea to talk to an estate planning attorney about drafting a will and possibly setting up a living trust to manage your individual and joint assets.
3. Review your Insurance Coverage
While you have those insurance policies out, go ahead and review them for under-coverage, duplicate coverage, or lapses in coverage. This could include anything from homeowner's or renter's insurance to life insurance to health insurance. You might also save on auto insurance premiums if you combine policies. If you've combined households, you'll likely be dropping one homeowner's or renter's insurance policy, but make sure that the remaining policy has enough coverage to protect your combined household goods, especially items that are typically limited, such as jewelry, computer equipment, collectibles, etc.
If both of you have health insurance coverage, review the plans closely to see if it makes more sense financially or from a benefits standpoint to cancel one of the plans or keep both. You typically have 30 days after your marriage to add your spouse as a dependent without providing evidence of insurability.
4. Calculate Your Joint Net Worth
It's important to know where you stand financially as a couple and to know and understand each other's personal financial situation. The exercise of calculating your net worth will do just that. Use bank statements, investment statements, credit card statements and other documents to list your combined assets and your combined debts to obtain a "snapshot" of your financial situation, which will put you in position to accomplish "To Do" number five. If you haven't already done it, now's also the time to obtain copies of your personal credit reports. While you're checking out each other's credit profiles, that's a good time to discuss an action plan for dealing with student loans, credit cards or other debts if either of you have them.
5. Review Your Financial Goals
Goal-setting is perhaps one of the most important financial "To Do's" for a newly married couple. Ideally, you've already started the conversation before getting hitched and you've discussed things like your debt payoff plan, savings goals, retirement planning and whether you'll add a child or two to your family. If you didn't have these conversations before saying "I do," no time is better than now to start. Take time to discuss your individual goals and what you'd like to achieve financially as a couple. Then, list the specific action steps you'll need to take to achieve each goal and your time frame for completing them. And remember, once you cross one financial goal off your list, start thinking about the next one you want to pursue.
6. Develop a Joint Budget
A budget is one of the most valuable financial tools you can have at your disposal as a newlywed. With a budget or spending plan in place, you and your spouse are both able to feel in control of where your money's going. If you're not sure where to start with making a budget, using a budget worksheet and guide can help. You'll want to calculate your combined income and subtract your combined monthly expenses and debt repayments. If you have money left over, talk with your spouse about how you'll use that money. It could go to savings, debt repayment or spending but the key is to make sure you're both on the same page with decision-making.
7. Decide on the Mechanics for Managing Your Financial Affairs
Now that you have a complete picture of your joint finances, an understanding and agreement on your financial goals, and you've create a budget that works for both of you, it's time to decide on mechanics of managing your finances together. Will you open a joint account from which to pay joint bills? Will you still maintain separate bank accounts? How much will you both save? Where will savings be kept? How often will you talk about your finances? Will one of you be responsible for making sure the bills get paid each month or will it be a joint effort?
These are important questions to ask and the sooner you get the ball rolling on answering them, the smoother your new financial life together is likely to be.