Congratulations! Getting married is so exciting, even if it is a little stressful. Use these pointers to make sure you and your spouse-to-be are on the same page regarding your personal finances.
How Should We File Our Taxes?
I get this question from a lot of newlyweds, and there’s one thing you should know - you can no longer file a single tax return. Your tax filing options are based on whether or not you’re married on December 31st of any given year (except in the case of a widow(er)), so in the year you get married, your options become Married Filing Joint (MFJ) or Married Filing Separately (MFS). In most cases, MFJ results in the lowest tax liability. However, MFS may be beneficial, especially for couples with high student loan balances.
Talk About Whether You’ll Combine Your Finances
Start this conversation with a personal inventory. How do you manage your finances? How would that interact with your partner’s strategy? It’s okay if you want to keep things separate, but keep in mind that you’ll likely be filing taxes jointly anyway, and keeping finances separate tends to make things a little more complicated.
Will Spending Habits Cause Friction?
It’s important to agree on boundaries for nonessential spending. This is especially true if one of you is a big spender or has an expensive hobby. Consider implementing a certain threshold, above which you’ll always consult the other before the purchase, and talk about what would get cut if your income decreases or other costs increase. It’s best to have these discussions before the pain begins.
Review (or create) Your Estate Plan
Draft a will (or trust) and powers of attorney for healthcare and finances. There are ways that you can do this online, but if you have a somewhat complicated situation, it’s probably best to engage an attorney. It’s going to cost some money, but you want to ensure this is done in accordance with your local laws. Also, update your beneficiaries. Even if you have a will or trust, the accounts will go to whomever the beneficiary is upon your passing.
Consider Hiring a Financial Planner
It’s often beneficial to have an informed and impartial third party around to help you make the big decisions in life together. This can be a great way to limit potential arguments over money and implement the strategies that are best for your situation, not just rules of thumb. And hey, even if things don’t go well, you have someone to blame that isn’t your spouse.
As always, keep in mind that you don't have to go it alone. Check out my website to see what it's like to work with me and reach out if you have any questions.
If you found this post helpful, help spread the word! But remember, this is solely for educational purposes - it's not advice.
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