12 Financial Steps Newlyweds Shouldn't Ignore
Now that each of you has the other to consider, take these measures to protect your financial future.
There's no magic or mysterious new financial math to puzzle over when you get married. Good financial advice is just doubly good when you're a couple. So most of the steps you should take when you get married are pretty standard. But they start with the golden financial rule: Figure out where your money is going. Even if it means using the dreaded "B" word -- budgeting.
And don't forget these steps:
1. Take advantage of a 401(k) plan. If either of your employers offers this retirement plan, use it, especially if the employer offers a company match. Having the money automatically withdrawn from your paycheck will cut your income-tax bite and will give you one less monthly headache over how much to save and where to invest it. Decide once and just revisit your choices at the end of every year.
Don't forget to designate your spouse as benefactor of the plan should you die, and make sure your spouse does the same.
2. Create an emergency cash reserve. Some experts advise setting aside enough to cover your expenses for up to three months, others recommend six months to one year. While you may be comfortable with more, or less, make sure you take action now.
3. Review insurance coverage. This includes disability, car and homeowners insurance. Also, consider disability insurance. "Your future earnings potential is your biggest asset," says Elissa Buie, a financial adviser in Falls Church, Va. "Failing to insure it is like building a house with a faulty foundation," she adds. Life insurance can wait until you have kids (as long as both of you have adequate incomes), but disability insurance shouldn't. If you have disability insurance through your employer, make sure it's enough to cover your monthly expenses.
4. Write a will. If you don't decide where your money will go when you're gone, the courts may.
5. Set goals. Like everybody else, married couples should set goals for the future. Again, sit down and talk about your goals. Find out where you diverge and overlap. Discuss compromises. Be specific. If you want to buy a house, when do you want it, and where -- and how big a house? If you plan to have children, how many will you have and how much will you help pay for their college education? When you retire, how old will you be and will you spend your old age gardening or traveling around the world?
6. Establish a joint bank account. Even if you each maintain individual accounts, it helps to have a "household" account to which you both have easy access, says Patricia Schiff Estess, author of Money Advice for Your Successful Remarriage.
7. Rent a safe-deposit box. It should be in both names.
8. Update your W-4 form at work. It should show the new number of dependents. Also, rethink your tax situation and make adjustments to minimize the tax bite.
9. Send out notifications. Tell Social Security, the IRS, the Department of Motor Vehicles, credit card companies and employers of any name or address changes.
10. Reevaluate investments. Know and understand each other's investments, and review your combined portfolio for diversity (range of investments) and liquidity (money you can get hold of quickly if you need to).
11. Change beneficiaries. Look at life insurance, pension and profit-sharing plans, employer 401(k) plans, and bank accounts.
12. Coordinate medical and dental benefits. Weed out duplicate coverages, and see how you can maximize your benefits.
Generally, happy endings take careful planning. So if you grew up imagining that the fairy-tale princess and prince were murmuring sweet nothings about glass slippers and such as they rode off into the sunset, think again. They just as easily could have been discussing 401(k) plans and joint checking accounts.