A Crash Course in Money Management for Newlyweds
Now newlyweds, you’ve most likely (or hopefully) exchanged financial histories and goals, spending and saving habits, debt, expectations and even the financial culture of your household as a child. If you haven’t already, begin to break down topics in depth, like student loan payments, managing credit card spending, tracking expenses, retirement or saving for a down payment on a house. When it comes to finances as a married couple, leave no topic untouched. Here are other areas to cover as you begin to set a financial foundation for your marriage.
Prepare for Divorce as newlyweds
Congratulations! You and your now spouse just exchanged vows to be there for the other, for richer or poorer, for better or worse. Now it’s time to prepare to separate. Joking aside, the reality is that neither of you can predict the future and divorce isn’t out of the realm of possibility, despite your recent commitment. Safeguard your finances by maintaining your own savings bank account with at least six months of expenses saved. And with your own credit card, you can establish you own credit in case (in the worst case scenario) you need to buy you own car or house. You may also want to record your assets from pre-marriage and file your account statements.
Be Proactive with Estate Planning
Now that you’re legally in a partnership, Ward & Oehler, LTD. Attorneys at Law recommend drafting a will or updating a current will to include your spouse. This type of financial planning outlines important decision making like who is the personal representative or executor, how assets should be distributed, determining guardians for children and establishing trusts. Smart estate planning also includes designating a power of attorney to make financial decisions when you’re not able to and completing a health care directive, which is a form used to make medical decisions. To cover all the bases, update beneficiary designations on all financial accounts and re-title real estate for joint ownership over a property.
Do both you and your spouse financially contribute to your household income and expenses? You’ll want to consider life insurance to support your surviving spouse in the event of being left financially devastated. It’s an especially good time to buy life insurance if you’re healthy and part of a lower age bracket. Secondly, determine whether enrolling in one health insurance program or staying on your own plan makes the most financial sense. Make sure to check with your insurance provider about qualifying for these “life events,” because you most likely only have a certain amount of time to make these changes. You may also want to ask about lower premiums for being a married couple.
Communicate About “Financial Risks”—or, rather, “Opportunities”
Before marriage, you and your spouse may have had steady, stable income streams. Now your spouse wants to pursue their entrepreneurial dream and venture out to start a business. It’s not an outrageous vision. In 2015, the entrepreneurial potential was 43 percent, according to the 2015 Amway Global Entrepreneurship Report. This is a measure of how many respondents can imagine starting a business, which is fairly high. Whether pursuing entrepreneurship is a risk, or an opportunity, the economic and lifestyle change affects you.
By engaging in the entrepreneurial spirit, you become a supportive motivator who believes in your spouse. This establishes trust and can foster momentum for harder work (and greater success). Prior to carrying out a business idea, take time to set expectations and explore all scenarios, from financial strain and a household absence to unmet needs and sacrifices. Determine ahead of time how can you 100 percent truly be in it together.