Are you or one of your children typing the knot soon? For any couple heading to the altar, financial matters can emerge as a major challenge. As much as you may love each other, there’s no guarantee you’ll be on the same page about money. In fact, it’s not unusual for a “spender” and a “saver” to join together in holy matrimony, only to find out they’re at odds over finances once the honeymoon is over.
One way to overcome this obstacle is to address financial issues before you wed. Consider these five practical suggestions:
1. Conduct an inventory. It may help to start by figuring out who has what and how much. List the assets you have coming into the marriage and get your partner to do the same. But don’t forget the other side of the ledger. Be sure to take stock of each one’s outstanding debts and other liabilities.
2. Get organized. Once you’ve finished the inventory, put your financial affairs in order. One big decision is whether you want to keep your individual assets separate or combine them into joint accounts. This is a personal preference, but younger couples tend to pool their resources while older couples, especially those embarking on a second or third marriage, may be more likely to maintain separation, at least initially. You will need to consider the beneficiary designations on retirement accounts and other holdings. For example, will you leave things to each other?
3. Set your priorities. Developing a long-range financial plan actually can help your marriage succeed. Do you want to have kids? Will you pay for their college? What about owning a home? It’s not too early for newlyweds in their 20s or 30s to establish savings goals. Also, don’t ignore the need to set aside funds for retirement, even if it’s decades away. If you have other objectives – owning a vacation home, for instance – factor those into the mix.
4. Don’t forget insurance. While your main focus is likely to be on meeting your goals, you can’t assume everything will go smoothly. An illness or job loss could be a major setback and put pressure on your marriage. One way to hedge against future problems is to obtain health insurance, life insurance, disability income insurance and long-term care insurance.
5. Hope for the best but plan for the worst. You’ve probably heard that almost half of marriages end in divorce. It may be difficult to broach the topic, but you may want to consider using a prenuptial agreement, especially if you’re the one bringing most of the assets into the marriage or if you’re getting married later in life. “Prenups” no longer carry the stigma they once did, and having a clear-cut agreement about what happens if you split up actually could help keep you together.
If you would like to discuss these or other strategies for discussing finances as a couple or family, contact us at 913.814.3800.
Please remember that different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product made reference to directly or indirectly in this content, will be profitable, equal any corresponding indicated historical performance level(s), or be suitable for you or your portfolio. Due to various factors, including changing market conditions, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this newsletter (article) serves as the receipt of, or as a substitute for, personalized investment advice from Searcy Financial Services, Inc.
The content of this letter does not constitute a tax or legal opinion. Always consult with a competent professional service provider for advice on tax or legal matters specific to your situation. To the extent that a reader has any questions regarding the applicability of any specific issue discussed in this content, he/she is encouraged to consult with the professional advisor of his/her choosing.
Originally published on January 18, 2017 by Searcy Financial Services, your Overland Park, Kansas Fee-Only Financial Planner and Investment Manager.