NEW YORK, January 20, 2022 (Newswire.com) - Marriage is the joining of two lives. That often means joining living arrangements, household items, and families. But in addition to the more romantic aspects, marriage also means a joining of financial management. That means couples now have the power to work together toward financial goals to build a greater chance of long-term financial success.
Before couples take a walk down the aisle, here are five essential financial tips to consider.
Openly Discuss Financial History
Unfortunately, financial secrets have a way of bubbling up. That's why being transparent about finances is one of the best things couples can do to ensure future financial success. Laying all the cards on the table before marriage gives a chance for partners to come up with a game plan for any debt or lingering financial issues from prior years.
Plan to Update Financial and Legal Documents
While someone may not submit the paperwork until they officially say "I do," it's smart to plan for updates to financial and legal documents, including wills, trusts, and beneficiaries on life insurance policies. Failure to complete these updates could mean money falls into the hands of old beneficiaries and won't be there to support a new spouse if there's a sudden passing, and with many types of insurance, the beneficiary designation will override even a will.
Understand Tax Differences
Marriage can add another layer of complexity to annual taxes, especially if one or both spouses are bringing a more complicated financial component, like a rental property, business, or children. And there are certainly pros and cons to filing taxes as a couple that are worth considering before the first year's taxes are due.
Since taxes can be a complicated beast, it's smart to decide if a couple will file independently or work with a tax professional once they get married. Knowing this in advance can help ensure timely filing.
Decide How to Manage Future Finances
There are several ways for couples to manage their finances in marriage. Some couples choose to combine everything, others keep some accounts separate, and others still choose to keep financial management exactly as it was before the nuptials.
Whatever a couple decides, both spouses must be on the same page. Failure to agree on an approach to future money management could lead to an unnecessary disagreement down the road.
Talk About the Family Investment Strategy
It's no secret that different people have different tolerances for risk regarding their investments. For example, in a couple, one partner may keep their retirement accounts invested in 100% stocks, while the other opts for a more conservative portfolio that includes bonds.
Knowing about any risk tolerance discrepancies in advance allows the couple to discuss how future investments will be handled. Then, if coming to an agreement seems impossible, it could be the perfect time to pull in a financial professional to help create an investment plan that makes everyone happy.
The Bottom Line
Financial management will look different for every couple. But a few key tips, like being transparent, updating financial accounts and talking about future finances, can help every couple get on the right track. And a couple that's aligned on finances going into marriage can often look forward to a future of financial ease. Is there any wedding present better than that?
Source: Northwestern Mutual