Develop a budget
- A budget lets you to live on less than you earn.
- A budget’s shared purpose can unify couples. It can be divisive if not developed together.
- A budget can relieve stress by removing some uncertainty from finances.
- The goal is to avoid surprises.
- Include saving in your budget.
- One goal is a cash emergency fund of three to six months of living expenses.
- Take advantage of 401(k) plans, 403(b) plans, IRAs and other qualified retirement accounts.
- Regularly review your budget and actual results together.
- Go into marriage with a clear understanding of the amount of debt each spouse is bringing to the union.
- Be cautious with debt and use it wisely. Debt can be helpful for prudent purchases (e.g. a house), but can magnify the impact of indiscretions (e.g. using credit cards to amplify overspending tendencies).
Who will be the money manager?
- One spouse may be better suited than the other for this role.
- Decide who will pay bills, balance bank accounts and handle day-to-day tasks.
- The money manager should keep the other spouse in the loop.
- An emergency book is a useful tool for the spouse that isn’t handling day-to-day finances. The emergency book can contain passwords, bank account information and other critical information that will allow either spouse to access information quickly if the other spouse is disabled or deceased.
- Consider taking a personal finance class as a couple.
- File Form SS-5 promptly; names and Social Security numbers on your joint tax return must match Social Security Administration (SSA) records. You may obtain it from SSA.gov or from your local SSA office.
- Tax filing status is largely determined by your marital status at the end of the tax year.
- Change your income tax withholding by filing new Forms W-4 with your employers.
- File Form 8822 to advise the IRS of a change of address.
- Life insurance is essential for meeting the financial needs of survivors who depend on a spouse’s income.
- Disability insurance can provide partial replacement of a disabled spouse’s income.
- Ensure that you will have sufficient coverage for your home, automobiles and other property.
- Consider the need for an umbrella policy to provide additional liability protection.
- Don’t forget to consider renter’s insurance for personal property if you will rent your personal residence.
- At a minimum, have a will drafted. Seriously consider hiring an attorney to draft the will, financial power of attorney, patient advocate designation and to advise you regarding your unique situation.
- Ensure that beneficiaries listed on life insurance policies and retirement plans align with your estate planning objectives.
- Be sure to update your estate plan for major life events such as the birth of a child or a significant increase in wealth.
Courtesy: Christopher Harper, CPA, MBA