By Kristi De Rycke, Registered Assistant
Does the proposal seem like a lifetime ago? The past year has been filled with checklists, fittings, showers, parties and culminated in the big day. Now the gifts are put away, the thank you notes are in the mail and the sneak peak photos are posted to Facebook. Hopefully, everything went as close to your plan as possible. As one bride told me, “I wouldn’t recommend trying to plan a wedding in the middle of a pandemic”. Do you find yourself wondering “Now what?”. So much focus was on the wedding and now it is past you. All the fluff aside, your true desire is to be married happily ever after. These action steps can help your marriage get off on the right foot.
1 - Start with this one as it is the easiest. Make certain all of your accounts have your new spouse listed as the beneficiary if that is your desire. You will need to call or get online for each bank, investment, and retirement account. You will designate a primary beneficiary which is typically your spouse and then a contingent or secondary beneficiary in case something happens to both of you. If you have a will, make sure to update that as well. This action step was put in the #1 spot not just because it is the easiest. As with many things that I write, a personal experience was the motivation for this article. A young couple had been married a little over a year. After the wedding, they purchased a different home together and had been moved in and settled. The young man died unexpectedly. She was devastated by his death. In the midst of this great loss, she found out that he had never changed his beneficiary on his retirement account. They had planned on two incomes when they purchased the house. It breaks my heart that during all of that grief that she had to worry about having to quickly sell a home full of memories.
2 - #2 links right in with #1. If you have or plan to increase your expenses with liabilities that require two incomes, make certain to cover yourselves with life insurance policies in the event something would happen to your spouse. Most funerals cost close to $10,000 and many young couples do not have this amount saved in an emergency fund. Hopefully, you will never need to worry about anything happening to your spouse, but an inexpensive term policy could cover both of these worst-case scenarios. There are also more complex insurance products that may be a better answer for you. Discuss these with your trusted advisor.
3 - Let us move on to better thoughts. You are going to live long, happy lives together. What will that look like? What are your hopes and dreams? I imagine that you have spent some time discussing this during your dating years. This would be a good time to sit down and further discuss your financial goals. Part of this discussion has to be where you stand now. Do you have a clear understanding of each other’s assets and debts? Run a credit report on each of you. You can do this free 1x per year with each of the three direct credit agencies: Equifax, Experian, and TransUnion.
4 - Have you heard the phrase: “You spend your dating years learning about all of your similarities and your marriage finding out all of your differences”? I guess it time to get started on that. If you have not done this yet, sit down with your spouse and make sure you lay out all your baggage. What debts do each of you have? Discuss what liabilities that you hope to pay off first as a couple. Consider looking at either debts with the highest or variable interest rates or ones that are closest to being paid off. If you use the ones that are closest to being paid off, then you can roll the money that typically would have went to that bill to the next debt. Then discuss what your financial goals are. Look long term and work your way back. Do you want the option to retire early? Do you have a goal of how much to save? Do you want to purchase a different house or do any remodel projects? Do you want to take any special vacations? You can use the following calculator to determine how much you will need: Saving For Retirement Calculator
5 - Have you discussed if you want to keep separate accounts or combine accounts. Combined accounts would be simpler to keep track of once you did the initial bank account switch. You could also set an allowance for each that you can spend that amount without asking your spouse. If you go the separate account direction, consider also opening a combined account. Have so much out of each of your separate accounts go into the joint bimonthly or monthly and write checks for mutual expenses out of that account.
6 - Look at the big picture. Consider yourselves as a team facing the world now. If one spouse has a better match in his or her 401k, funnel more money to that 401k to get the full match and take expenses out of the other paycheck. In our culture of a 50% divorce rate, the thought of “what if” must have crossed your mind. You can take that off of your worry list. Anything accumulated in the marriage would need to be split in half and get transferred to the non-owning spouse if that happened.
7 - Review both of your medical benefits as well. Is it better for your each to be on your own employer’s health insurance or would going to one be a better option for you as a couple? Marriage is a qualifying event to be able to add someone in the middle of the year, but you often have to do it within so many days of the marriage.
8 - If 2020 has taught us anything, it has been the hard lesson that you cannot predict the unpredictable. You can, however, plan for it. Add up all your monthly expenses. Divide any biannual or annual expenses like house taxes by month. Work to save 3-6 of your monthly expenses in a safe place that you can access your money within days if say you are laid off due to a worldwide pandemic or have massive house damage related to a derecho.
9 - Contact your home and auto insurance agent. You may get a multi-car or multi-line discount if you are all on one insurance versus with two different companies. This also will make bill paying more convenient.
10 - Contact your human resources. You may need to update your W4 to include an allowance to avoid a higher-than-expected tax bill. It is a good idea to adjust the W4 when you get married, have a child, buy a house, or get a large pay cut or pay raise. This online tool from the IRS is helpful to determine how your selections affect your results and what you are likely to have to pay in or get as a refund.
This checklist should get you well on your way to financial stability. Congratulations and best wishes! If you have any questions, do not hesitate to call our office.
By Greg Johnson
First off congratulations on your marriage, becoming one through marriage is the ultimate gift. Kristi is spot on with her recommendations above. Don’t overthink things, just get going on making the necessary changes. Other things she missed may include things like updating your social security card, credit cards, driver’s licenses, and others to reflect any name changes that occurred. At the end of the day the most important part of your early married years is enjoying each other. Learn to love each other and get to know each other as well as you can. Kids will bring their own set of rules and life will always throw curveballs at you. Being in a solid relationship will help you through all those stages. As the Stephen Covey says in 7 Habits of Highly Effective People – Begin with the End in Mind. Live your life like you were dying tomorrow and enjoy all the little things you must be grateful for.