Once the thrill and excitement of the wedding dies down, it is time for the newly wed couple to sit back and plan their financial future. Money is supposed to be the villain in most of the divorce cases, but there should be no problem for you to live happily ever after if you plan well to address your financial concerns. For a newly married couple, the most important financial concerns are usually life insurance, savings options, form of property ownership, and money management.
For your insurance needs, you should have sufficient coverage to sustain your family’s present income level in case you die. If you happen to be the only earning member, or if you plan to start a family soon, then you should opt for life insurance. If you are young and live on a tight budget, it is better to choose term insurance for your short-term requirements. However, permanent insurance may suit you best for your lifelong needs as it builds cash value over time and provides you long-term insurance protection. You must also consolidate your medical insurance.
You should go for easy-access short-term savings. It is prudent to have three to six months’ worth of salary as an emergency fund. Money market funds, certificates of deposit and treasury bills are also good short-term savings. If you are in your 20s, save 4 to 8 percent of your gross income then double that savings percentage as you enter your 30s and 40s. If both of them have incomes, they might be able to live off one spouse’s salary and save the other salary.
If you plan to own a property, be it residence or other real estate, or if both of you already own a property together, you must find out the best way for holding that property. Decide whether it will be held solely by one spouse, or by both spouses jointly. As property ownership is a complex legal issue, you should better seek legal advice in this regard. In case you decide to place property in your fiancée’s name, avoid the federal gift tax by transferring ownership after the marriage.
Another crucial factor is the handling of day-to-day finances. A newly wed couple should discuss financial goals, resolve differences, and establish a budget and/or saving and investment plan. Opening of a joint account is not a must these days. Both of them should sit together and plan carefully what type of accounts will suit them most.
Although it is highly unlikely that such a thought would cross your mind at that time, it is wise to establish a will as soon as you get married. If both of you die without an established will, a court or state laws will dictate how your assets will be distributed.