Congratulations, you’re married!
You’re probably ready to relax, after all the work that went into planning your wedding, right? Not so fast — you still have a few financial issues to sort out first.
Now that you’re a couple, how are you planning to handle your banking? There are three basic methods:
- Maintaining separate accounts
- Creating a joint pot
- Putting some money in a joint pot, and some money in separate accounts
Each of these methods has its own pros and cons. Slate Magazine did an excellent series highlighting true stories about couples who have tried each of the three methods. Regardless of what banking method you choose, you need to have this all-important discussion with your spouse as soon as possible.
Why do you need to change your car insurance? You and your new spouse already have car insurance, right? Well, a lot of people don’t realize that most car insurance programs do not want multiple drivers sharing the same car. If your spouse borrows your car and has an accident, your insurance may not want to pay out your claim.
Because of this, you need to upgrade your car insurance immediately. Choose a household plan that includes what is called “broad coverage,” preferably with a “multi-vehicle policy.” This means that you and your spouse have equal driving privileges on all cars owned by the household. Even if you and your spouse drive separate cars 90% of the time, having that broad coverage insurance will ensure that you don’t get financially wrecked if you or your spouse get in an accident while driving the other person’s car.
Many people know that marriage provides significant tax benefits, but few people know that getting married at any time during the calendar year, including on December 31, entitles you and your spouse to marriage tax benefits for the entire calendar year. Read up on the IRS’s guide to changing your tax status as newlyweds, and make sure you tick off those to-dos as soon as possible.
If either you or your spouse enters the marriage carrying credit card debt, that credit card debt will still only affect the individual partner’s credit rating. It is likely that combining your finances will help you to pay down debt faster and free up more income for savings and future investments. As you pay down debt and establish your joint finances, it is important to make sure that each of you has at least one credit card just in your own name to keep your credit score high. As always, practice good credit card use and pay off your balances on time to maintain that high credit score.
The last item on this list is probably the most important. Financial disagreements are one of the top causes of marital discord, so make sure you and your spouse agree on what can best be called “money habits”; how much to save each month, how much to spend, whether to follow the budget to the letter or allow for some wiggle room, what counts as a discretionary purchase and how much money is available for those purchases.
Agreeing on a set of household money habits is one of the best ways to make sure you and your spouse are on the same team, financially. Without talking about your money habits in advance, you run the risk of making assumptions about saving and spending that lead to disagreements later.
These aren’t the only financial issues newlyweds need to address, but they’re some of the most important. Married readers: what else do newlyweds need to know about managing finances as a couple? Let us know in the comments.