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Things to Consider Financially Before Getting Married

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Updated August 23, 2020

Trust Point

We are proud of Trust Point’s century of service reputation of excellence. But, our approach and purpose has always been focused on the future. Not just our own company’s future - but, more importantly, our client’s futures.

Getting married is a significant life event.  It means the beginning of a new chapter, with your spouse at your side.  Getting married brings with it a host of financial decisions that are important to consider. It’s likely that your finances will become a bit more complicated.  Instead of just considering yourself, now, you’ll need to consider your partner as well when it comes to almost all financial matters.  Below are some of the most important financial topics to discuss before you get married.

Existing Loans and Debts

The existing debts and loans that you each owe are one of the most important aspects to consider before marriage.  Most people of typical marrying age and some that are marrying later in life will likely have one or several of the following kinds of debt: student loans, car loans, personal loans, and credit card debt.  Most debt belongs to the individual who originally borrowed it unless you have a co-signer. However, while you may not legally be “on the hook” for your partner’s debts, once you become married each of your loan responsibilities will now impact your joint household, which affects you both.  Make sure that you have an open and transparent conversation about all forms of debts in each other’s name, and what the plan is to repay it on time. Your debt to income ratio as a couple could play a significant role in whether or not you decide to co-sign together on a mortgage or car loan to get the best interest rates.

Family Planning

The decision on whether or not to start a family is often thought of from the perspective of “life choices,” but sometimes people neglect to consider the multitude of financial considerations that come with this decision.  How do you plan to care for your children when they are born?

Will someone stay home with the children, will you choose to pay for childcare, or a mix of both?  You should consider that your income might be significantly reduced for a few years while you are caring for them before they enter elementary school.  Also consider that if one of you drops below the necessary hours to be eligible for benefits from your employer, then likely the full-time spouse will have to put everyone on their insurance plan.

Having a family may also necessitate that you start thinking differently about insurance.  Life insurance may be desirable to ensure that your family is taken care of if something unfortunate happens to you.  You may also consider a long term or short term disability insurance to safeguard your income flow in the event that you become injured.  Disability insurance can be especially important to those who work in physically demanding professions such as construction or home maintenance, or occupations that require a lot of time on your feet such as doctors and physical therapists.

You should also consider how your assets will be handled in case of an unfortunate event.  It will be time to start looking at setting up a will and/or a trust to control how your assets are dispersed in your absence.

Long Term Financial Goals

Marriage is fundamentally a partnership between you and your significant other.  In order to make it a successful partnership, you need to make sure that the two of you are on the same page regarding your financial goals.  Are you both individually and collectively on track to retire comfortably? If not, how will you plan to get back on track? We’ve already discussed debt, but it should be a primary goal to make debt payments manageable and on the path towards being paid off.  

As you begin to build wealth, you should also consider what your long-term plans are for investing that money.  Do you want to work towards buying a house? A 20% down payment along with about 3-5% in closing costs will be needed.  How do you want to work on building your wealth over time? Are you considering more conventional methods such as investing in a diversified portfolio of assets, or are your hoping to own a business?  How you choose to build wealth or purchase assets is one of the most important financial decisions you can make for your money. It’s important you and your soon-to-be spouse agree on the direction you’re working towards.

Managing Your Money

Financial control can be one of the stickiest subjects that a married couple will face.  There are many ways a couple can manage their finances, and there is no right or wrong answer, but it’s imperative that you both agree on the level at which you want to be involved.  Consider the following questions:

  • Will you have joint checking and savings accounts, separate accounts, or both?
  • How will you set your budget, and where will the money come from?
  • Who will be in charge of watching your budget and making sure you’re staying within your plan?
  • Who makes the investment decisions?

Where you land on all of these questions will depend on each person’s comfort with that part of the finances.  Some people want to have complete control and visibility for every cent that comes in and out, and some people would prefer to have nothing to do with it.  Make sure that you have a conversation about each of the questions above, and that you know who will be in charge of what. Poor communication, especially about finances, can put a lot of strain on an otherwise successful marriage.

Prenuptial agreement

We saved the most awkward topic for last.  While in the moment your relationship may last forever, there is the stark reality that somewhere between 40% and 50% of marriages in the U.S. end in divorce.  Without an agreement in place to dictate how assets are to be defined and divided, it can lead to significant legal disputes around your current and future finances.  Especially in cases where one individual is bringing significant financial assets to the table, it may make sense to put a prenuptial agreement in place to ensure that there is a fair financial settlement in the event that the relationship doesn’t work out in the long run.  If you’re afraid to have this conversation when things are going well, think how difficult it will be if things are going poorly. Reach out to a qualified attorney or financial advisor to discuss how the prenuptial agreement process works.

Trust Point Can Assist with the Financial Side of Married Life

Whether you need help with assessing your current financial situation, trying to understand how combining your finances will affect you or creating joint financial goals, Trust Point can help you!  Our team of certified financial planners can guide you through the tough, yet crucial conversations that will be essential to getting your marriage off on the right foot. Contact us today and let us know how we can help!

 

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Trust Point

We are proud of Trust Point’s century of service reputation of excellence. But, our approach and purpose has always been focused on the future. Not just our own company’s future - but, more importantly, our client’s futures.