Marriage and finances

Quick answer: During this happy time don’t ignore the financial realities of coupling. Make sure to discuss financial goals, combining accounts, any debts, and budgeting.

Before entering into a partnership, it’s important to understand each other’s views about money. Don’t forget marriage is a contract. You’ll have money flowing in and out. Here are some things to consider.

Topics to discuss before marriage

Combining accounts

Before getting engaged you may have your own savings, checking, and investment accounts. What mix of private and joint accounts is best for you? What independence do you need with your money? What joint goals are you both working toward?

Housing

Will you live in one partner’s home or find one together? If selling a property is in the picture, make sure to talk through potential tax consequences from capital gains with your tax professional.

Financial goals

Talk through where you want your money to go and with which priorities. How much of a cushion makes you both comfortable? What things do you want to save for? What types of insurance should you have now? (Don’t forget to revisit your insurance needs as situations change).

Budgeting

Now that there are two of you, you may have to reconcile different attitudes and habits. A budget is a good way to make sure you’re both contributing to working towards your financial goals.

Debt

This subject can be tricky, but it’s important. You both will need to feel good about when you borrow money and why. You also need to understand what debt each person is bringing to the marriage, and then decide which debts to combine and which to keep separate. There are pros and cons to each.

Many advisors recommend that each individual retain his or her own credit cards and credit history. Doing so helps ensure financial independence and provides greater flexibility if either spouse finds himself or herself alone at some point in the future. Also, if one spouse has a poor credit history, it may be advisable not to commingle debt in order to retain the other spouse’s better credit rating.

Prenuptial agreement

A wedding is a hopeful thing. It may not feel like the right time to be considering death and disability, but when you’re deciding to take responsibility for each other, it’s something you should discuss. Consider the consequences of losing wages or passing away without an estate plan in place. Pay attention to beneficiary designations on life insurance, IRAs , 401(k) plans and other plans that allow naming a beneficiary. These may supersede will or trust instructions. Questions should be directed toward your estate planning professional.