Justin Halverson joins us with advice on how best to blend two financial ideologies into one financial plan so that you can start your marriage off on the right financial foot.
MINNEAPOLIS – Love is in the air and wedding season is in full swing! It’s a wonderful time to celebrate but as many of us know, one of the toughest hurdles in marriage can be getting on the same financial page.
Justin Halverson joins us with advice on how best to blend two financial ideologies into one financial plan so that you can start your marriage off on the right financial foot.
Take Financial Inventory: Once you’re married and begin to merge your finances, first start by getting an understanding of all the moving pieces. Your financial inventory should be documented and should include:
• Income and expenses – create a budget by understanding what’s coming and what’s going out.
• Income – do the math to determine exactly how much money is coming in – along with your combined income, be sure to include any money coming in from side gigs, rentals, etc.
• Expenses – take note of all bills, monthly expenses like groceries and utilities as well as memberships and subscriptions.
• Debt – Determine your combined debt. Consider student loans, credit cards, auto loans, etc.
• Benefits – from 401(k)s to healthcare insurance, get an understanding what each spouse qualifies for at work.
• Insurance coverage – again, list all insurance policies
• Estate plans or wills – for many newlyweds there may not be a lot to this area yet, but if you have any beneficiaries currently listed on insurance policies or savings accounts, be sure to take note
Update & Create a Plan Together: Once you take financial inventory you may quickly start to notice areas that need updating. In addition to updates, you should also discuss a game plan for the various financial aspects of your life, including:
• Savings goals – now that you have a combined income, as well as the possibility of new financial goals (like purchasing a home), you’ll likely need to update your savings plan. It’s a good rule of thumb to saving 20% of your income, but if you may find it necessary to cut some additional expenses so that you can set aside more and reach your savings goals quicker.
• Payment plan for debt – Taking on each other’s debt can be tricky to navigate and can easily lead to arguments down the road. Be honest and upfront with how debt each of you is carrying. Rather than getting overwhelmed or frustrated, create a proactive game plan that determines how much per month will be allocated to paying off debt and have a understanding of timeline until you hit a zero balance.
• Benefits – Arguably one of the most important financial tasks to take care of once you wed, updating your benefits can not only help cut cost, but also ensure you’re setting enough aside for the future. When it comes to your healthcare, compare each employer and determine which one best fits your needs. In addition to this, also review any retirement plan options like 401(k)s – you both should have retirement savings account so if one spouse doesn’t have a 401(k), consider opening an IRA. IF a 401(k) is an option, make sure you’re contributing enough to maximize any employer match.
• Insurance –Now that you have a better understanding of the policies you currently have, you may find that you have some missing coverage. For newlyweds, this is often life insurance since you may have not seen the need for this prior to marriage. Shop around and find a policy that works for you and your spouse.
• Update your beneficiaries – From life insurance to your retirement savings accounts, anything that lists a beneficiary likely needs updating now that you’re married. This is a crucial step that many newlyweds forget to take, and it can leave you in a world of hurt if one of you were to pass. If you choose to expand your family eventually, you should also revisit this step each time you have a child.
