Wedding ceremony night. Meeting of the newlyweds, the bride and groom in the coniferous pine forest of candles and light bulbs.

Love Is In The Air – Planning for I Do

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Congratulations on your decision to get married! Marriage is a significant life event that brings joy, companionship, and shared responsibilities. As you begin this exciting journey together, it’s essential to not only plan for the wedding day but also for your financial future. We explore key financial planning considerations to help you build a strong foundation for a prosperous and harmonious life together.

Setting Your Marriage Financial Goals

Having open conversations that include creating a financial plan before you get married is extremely important. A Fidelity study found that couples making money decisions together are more confident about their financial future, and 84% don’t consider money their greatest relationship challenge.1 The types of financial discussions and decisions you make before marriage depend on your age and stage in life. Younger couples who have never been married and don’t have children, businesses, or many assets may focus on budgeting and saving. Older couples who were previously married or those with more complex assets and financial lives may need advice from professionals such as accountants, attorneys, and financial planners to combine their lives and assets. Among the financial topics to discuss before marriage are your combined assets, liabilities, income, expenses, and goals for financial independence. Some important issues to consider:

Housing:  For many couples, buying a home together is the next step after marriage. A mortgage may be your largest debt, so it’s essential to discuss your aspirations and plans for owning a home. Part of the discussion should be evaluating your credit history and determining what needs to be done to qualify for a mortgage loan. For those who own a home, marriage can be an excellent time to evaluate the real estate market and decide whether you want to live there, keep it as an investment, or sell it.

Children: The decision to have children, how many, and when can significantly impact your financial planning process. A larger family may lead to conversations about car and home choices, while planning to have children soon after marriage may necessitate speeding up savings plans. Costs for education may need to be factored in. Will one of you stay home to raise your children? This is especially important if your unmarried, childfree lifestyle is based on two incomes.

Debt Management: During initial financial discussions, both partners need to be open about any personal or business loans and how they will be paid down. Debt from the past isn’t the only thing you should consider; you should also plan for future debt. This process can involve deciding if you want to share credit card accounts and what debts you’re comfortable incurring together.2

Creating A Budget Before Marriage

As you combine your households, you’ll need to create a financial plan that incorporates your income, assets, and liabilities. You’ll need to determine whether expenses will be split or shared moving forward, as well as discuss savings and investing options that fit your financial situation and agree upon monthly contribution amounts. This can be a difficult conversation for people with pre-existing personal finances in place to support their individual lifestyle preferences. Things to discuss (aside from the wedding and honeymoon budget) include:

  • Sources of income and their expected duration
  • Possible career opportunities or changes
  • Possible inheritances or other expected changes to the financial situation
  • Outstanding debt payments
  • Discretionary and nondiscretionary expenses
  • Saving for emergencies
  • Retirement plan contributions
  • Larger long-term funding goals, such as buying a house or paying for college tuition

Combining Assets

Combining finances or keeping them separate is a decision each couple must address. Some couples co-mingle accounts completely, while others keep them separated. Others choose a hybrid approach with some combined accounts and some separate ones.2 If both spouses come into the marriage without wealth, they may be more likely to open joint accounts because they are starting from scratch and building assets together. Spouses who bring wealth into the marriage or couples in a second marriage may want to keep at least some of their assets separate.

Property is generally divided into two categories after a marriage: marital or separate. Marital property is usually anything bought by either or both spouses during their marriage. Separate property is anything a spouse brings into a marriage that they owned previously. In community property states, such as California, certain steps need to be taken to retain the character of separate property after marriage because property acquired during the marriage by either spouse is presumed to be owned by each spouse equally.

If you’re entering a second marriage and have children from your first marriage, sharing assets may be problematic when planning your estate. Couples may prefer to keep inheritances separate or earmark some accounts for children from prior marriages. Another option to consider when combining assets is the need for a prenuptial agreement. A prenuptial agreement may be appropriate if one or both spouses come from a wealthy family and want to protect their inheritance, if one of the spouses owns a business or has a high-paying job, or if a spouse has children from a previous marriage that they wish to provide for in the future.

Investments, Retirement, and Estate Planning

Spouses-to-be should share information about investment accounts and other savings. Depending on your life stage, sharing information about any IRA, 401k, and pension plans you have and checking your Social Security benefits may be important. Once you’re married, it is important to plan for your retirement together so that you can decide how much each spouse will contribute to their respective IRAs, 401k’s, etc.

As part of your financial planning process as a couple, consider establishing a basic estate plan when you get married, no matter your age, in case the unexpected happens. This includes a will, a living will with an advanced healthcare directive, and a financial power of attorney. Depending upon your circumstances, consider establishing a revocable living trust, which in some states is also known as a family trust. For a second marriage, especially if you have children from a prior marriage, estate planning becomes more important to help determine how to divide assets between your beneficiaries equitably.

Final Thoughts

Embarking on the journey of marriage is a thrilling experience. With careful financial planning, you can set the stage for a secure and prosperous future together. Remember, a well-thought-out financial plan is about securing your financial future and building a foundation of trust, understanding, and shared aspirations. At Treehouse Wealth, we’re here to support you through a lifetime of financial harmony and happiness!

1 Denny Ceizyk and Heidi Rivera, February 1, 2024 Money and Marriage: What to Talk About Before You Tie the Knot, Bankrate 
2 Pre-Wedding Financial Checklist: What Couples Should Consider, City National Bank

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