FINANCIAL PLANNING
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Financial Planning for the Newlyweds

Begin by having a heart-to-heart talk about how finances will work best in your marriage. Remember, you've managed your money separately until now. Will you immediately combine all of your assets, keep separate accounts indefinitely, or gradually integrate things? Honest discussion today can help set realistic expectations, and lay the groundwork for open communication in the years ahead. 

Keeping a healthy financial balance in your marriage requires regular attention, especially as you're newly married. When you've established a comfortable plan, be sure to set a date every three months or so to meet over a cup of coffee and reassure yourselves that your financial strategy is still on target. 

Begin today by asking the following questions… 

What are your financial personalities?
Chances are you know this about each other by now. Everyone has a distinctive money personality, typically falling within a range of two categories: saver or spender. Opposites often attract, and you may admire your mate's disciplined approach to saving or ability to indulge occasionally without deliberation or guilt. But can you live with this day-to-day when it's your family finances that are involved? If you find yourselves clashing often about money issues, resolve to work toward compromise and dialogue. 
 
How will you divide money-management responsibilities?
It's cliché but true when it comes to home finance: two heads are better than one. It may make sense to have one person in charge of the basic household bill paying – perhaps one of you has more time or interest for the job – or maybe it will work best to rotate the task. But communication is absolutely essential here – you should both be savvy about the financial state of your marriage, and be equally involved in the decisions that affect the bottom line. 
 
What financial loose-ends are each of you bringing to the marriage? 
It doesn't make for the most romantic conversation, but it's a good idea to have a frank discussion about your debts and credit histories sooner rather than later. This conversation can help prevent painful surprises down the road, and enable you to reach a solid understanding of how your mate manages money. Debt such as college or car loans is pretty typical, but a checkered credit history can make it difficult to obtain a mortgage or other credit down the road. 
 
How much debt can you live with?
If carrying a balance on your credit card keeps you awake at night while your spouse snoozes comfortably beside you, chances are you need to talk about your debt tolerance. Whatever your money personality, take the time to develop a plan to consolidate and pay off existing debt. Make it a goal to discuss substantial purchases before they're made, including how repayment will fit into your monthly budget.
 
What are your short- and long-term financial goals? 
This tends to be the easiest part of financial planning, since it's a topic often discussed by couples. Whatever your dreams, write them down along with a future date that you're shooting for. This will force you to prioritize, and help keep you focused on your goals. Start investing right away by paying yourself first each month. You'll be surprised at how even small investments have the potential to grow. 

Have you created a budget you can both stick to?
It's often easier to decide how money should be saved than how it should be spent. Should you split your discretionary assets into "yours, mine and ours" or pool everything in one joint account? There are advantages and disadvantages to both methods, but it really comes down to what's most comfortable for both of you. Consider using a personal finance software program to help you keep track of one or more checking accounts, as well as how much you're saving and spending. 
 
What tradeoffs are you willing to make to achieve your goals?
Work together to develop a savings strategy that you can both commit to. Can you shave some excess from the monthly grocery or entertainment budget to boost your new home savings? Or settle for a reliable used car instead of spending thousands more for a new model? Resist the temptation to splurge when you receive lump sums such as bonuses or tax refunds. Instead, agree to spend a small amount – 10% or so – and earmark the rest for savings. 
 
How much risk are you comfortable with?
Careful investing is an important part of realizing your financial goals. Consider working with an financial planning professional to help you build an investment portfolio targeted to your goals and with a level of risk that you're both comfortable with. 
 
Have you discussed the importance of having a separate credit identity?
Prudent credit card use can be handy, but it's a good idea to establish a new joint account when you marry; adding your name to your spouse's premarital account makes you liable for the existing debt. You should also both hold a separate card in your own name. In doing so, you're maintaining an independent credit identity, which can be important if you anticipate a new business venture – or if the unthinkable happens such as the death of a spouse or divorce.