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After a year of wedding delays and cancellations, many couple who postponed their plans due to the pandemic are jumping back into the wedding planning process. For both those who had to wait and the newly engaged, we’re more grateful than ever to be able to celebrate these joyous occasions in person with friends and loved ones. New beginnings like these are also a great opportunity to work with your significant other to optimize your finances and create a plan for the future. Below are five tips to assist you in this process.
Be open and honest with your partner about your current financial situation and try to reserve any judgements on theirs. Discussing your personal and combined financial reality before marriage will make it easier to set realistic and achievable goals for your married life together. A great starting point is to prepare a balance sheet that shows your new combined assets and liabilities.
Set Your Goals
Discuss your values and visions for the future, using them to determine your goals. You can then decide which goals are “needs” and which ones are “wants,” which will help you prioritize accordingly. As you discuss your goals, think about what you want both in the short-term and the long-term. Setting these types of goals early will help you take the necessary steps and determine the appropriate timelines to achieve them.
Create A Budget
Once you’ve established your goals, you can look at your joint income and expenses in order to create a budget. A small portion can be allocated to each partner for more individualized activities and hobbies (such as golfing, shopping, etc.), while the majority of the budget should be looked at holistically. Partners who are able to hold each other accountable often have the most success with budgeting.
Plan For Emergencies
While it may be easier to think about the bright and enjoyable future, it’s still important to plan for the unexpected. An emergency cash reserve should be created as a “rainy day fund” and should have enough cash to cover expenses for at least six months. Also, the beneficiaries of retirement accounts (such as a 401ks or IRAs) and titling of individual and joint accounts should be considered. There are numerous ways you can title joint accounts, each of which has its own pros and cons, so it’s important to research to find the most suitable titling for you. Insurance, including home, auto and umbrella coverage, should be another consideration, and a trusted agent can help determine the correct amount of coverage you need to manage risk and protect assets.
While the above are great starting points, your financial plan needs to be updated as life changes. Whether it’s changing jobs, deciding to have children, or purchasing a home, your plan should be revised as your current situation and goals evolve. You can establish a predetermined time each year to review the plan and make any changes necessary, or you can take the time to update your financial plan as big life events unfold.
Getting married is an exciting time and can serve as a great opportunity to set the groundwork for your financial goals. Taking the time now to plan ahead can minimize stress and set the groundwork for a successful financial future. If you reach a point where you simply can’t allocate enough time to handling your finances, or if your situation becomes too complicated to understand, you can always reach out to a trusted Financial Advisor for assistance! Financial Advisors can help you create, update and adjust your plan to fit your needs as a couple as you transition into married life and beyond.
About the Author
Bryan Stretton, CFP, is a senior advisor associate with Wealthspire Advisors an independent RIA providing comprehensive financial planning and investing services to retirees, multigenerational families, and high earners with complex tax, estate, and charitable planning needs.