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Thursday, August 18, 2016

10 Financial Tips for Newlyweds

Words by Wealth Advisors at Regions Bank

Engagements, weddings and all the planning that is involved can be some of the most exciting times in any couple’s life. However, before starting a life together and embarking on a happily ever after, it is important to lay down the facts and speak openly about finances, expectations and long-term financial goals. Regions Bank offers plenty of insights for any couple looking to get the conversation started. Here are 10 tips that can help mitigate differences and minimize financial surprises.

1. Add money conversations to your list of pre-wedding activities. Money can be a leading cause of stress in a marriage. To ensure the likelihood of long-term relationship success, speak openly and often about finances.

  • Talk about what your current financial situations are. Do either or both of you have debt? Is one of you willing to contribute more toward the down payment on your first house as a couple? You will want to determine what your monthly expenses will be as a couple and whether you will split the bills down the middle.
  • Talk about your individual money styles. Are you a spender or a saver? Are you a planner with long-term goals or do you just hope for the best? Oftentimes a marriage will have one spender and one saver and it’s OK if one spouse is a spender and the other a saver, but you need to know what to expect and how to plan accordingly.
  • Decide who will be responsible for the actual task of paying monthly bills. Tempers can flare when a payment is late because one person thought the other person paid it. That person may take care of the monthly expenses, but it doesn’t mean they’re in charge of all financial decisions. You both need to discuss and collaborate on the big expenses.
  • Discuss which, if any, accounts and other assets you’ll keep separate. One or both of you may want to keep accounts and assets in your own name and retain full ownership rights. For instance, if you receive an inheritance or a monetary gift while you’re married and deposit it into a joint account, that’s probably going to be considered marital property in most states. If your spouse deposits his or her paycheck into your joint checking account, the same is true.

2. If a prenuptial agreement is right for you, you can help take at least some financial surprises out of your marriage. When considering a prenuptial agreement, honesty is the best policy. And, whether you are the one proposing the prenuptial agreement or the one who has been approached by your significant other about entering into a prenuptial agreement, it’s a good idea to consult with a qualified attorney about the implications.

  • Make a detailed list of all of your assets. Identify which assets you want to keep as separate property and which ones you are comfortable retitling as joint property.
  • Consider the duration of the prenuptial agreement. Some prenuptial agreements last for a set number of years and others have no end date. 

3. It's OK to agree to disagree on how to invest your assets. Here’s how to help you mitigate any strain these differences may cause in your marriage.

  • Be fair. Don't let your or your spouse's preferred strategy dominate the conversation or tactics used to invest. If you are investing money together, you both need to be comfortable with your decisions.
  • Consider a small side account if you or your spouse still yearns to be more aggressive after reviewing projections with your advisor. But remember: even your separate investments should support your shared long-term financial goals and you both need to agree that the amount in the small side account will not hurt these goals or create resentment if the more aggressive approach results in a total loss.
  • Together, review your goals and investment portfolio regularly (annually at the minimum) and adjust as needed. Try to take a businesslike approach to investment planning, even though it's difficult to separate emotions from money.
  • Use empathy to maintain marital accord. Seek to understand where your spouse's attitudes about spending and saving come from and consider each other's comfort zone when allocating assets.

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