Five financial tips for newlyweds

What advice would established couples give to newlyweds to help set their new financial unions up for success?

According to a Fidelity study, the top two pointers would be to avoid unmanageable amounts of debt, and to get an early start with saving for retirement.1

In addition to making smart money moves, it can be important to begin a new partnership with healthy lines of communication and a sense of joint ownership of your shared financial future.

Don't let disagreements about spending or different attitudes about money affect your new marriage; recognise that you are partners in financial planning and take that partnership seriously. 

Here are five ways newlyweds can help set their finances up for lifelong success.

1. Set goals

Spend some time thinking about your future and set some common financial goals, whether buying a home, taking the trip of a lifetime, or planning for retirement.

Next, make disciplined saving a habit. For retirement, see the "Start saving for retirement" article for more details.  

Finally, think about how you can match your investments to your goals. Have a look at the "Save for any goal" article for recommendations on both short-term and long-term goals. On the investment side:

• For those goals less than two years away — you may want relatively stable investments, such as money market funds or fixed rate investments.
• For longer-term goals—like saving for retirement or your children’s education—you might consider a mix of stocks, bonds, and short-term investments based on your risk tolerance, financial situation, and time horizon.

2. Get organised

Much of what couples do together comes down to their financial habits. To make the day-to-day of your finances run more smoothly, it can help to get organised. Here are some ways to do that:

List your assets and debts

• Include credit cards and loans that you each bring into the marriage

Decide how you will own assets

• Jointly or individually? Some couples prefer a “yours”, “mine”, and “ours” arrangement

Make a plan to tackle debt

• Even if one partner is coming in with more debt, develop a strategy together

Start following a budget

• Consider the 50/10+/5 budget. Be sure to set aside money for an emergency fund

Update your paperwork

• Make any needed updates if your name has changed, or for accounts moving to joint ownership

Decide if you want to consolidate

• Consider the convenience of having all of your accounts at one financial institution

Make a plan or spending decisions

• Talk about how you’ll handle day-to-day expenses and big-ticket purchases

Once your financial house is in good order, try to keep it that way with regular check-ins. Consider having a regular money date to review your household's cash flow and make sure you're sticking to your budget, as well as staying on top of any other items on your financial to-do list. Read this article for help with creating a budget.

3. Review your taxes

You may need to review your tax status once you're married. This can also be a chance to review your investment accounts to look for additional possible tax savings (these will differ by country and income band).

As you're reviewing your tax situation, consider whether you're making full use of any tax-advantaged accounts available to you to participate in individually or through your employer.  Earnings in tax-deferred accounts can compound faster than those in taxable accounts as you’re not paying tax up front; contributions to these types of accounts may also reduce your taxable income.  

4. Protect what matters most

When you get married, it's important to review, update, and in some cases purchase, different types of insurance. Here are some of the types to consider:

• Health insurance. Check if you could save by obtaining coverage under the same plan, like if one partner joins the other's employer-sponsored plan. See this article for details.
• Life insurance. Your employer may provide you with a certain amount of life insurance coverage, but many people find they need to purchase additional coverage on their own. If you do, you'll need to decide between term insurance, which provides coverage for a specified period, and permanent insurance, which remains in effect for as long as you live. See this article for details.
• Disability insurance. This usually covers a portion of your salary if you become disabled before retirement. Your employer or the government may provide you with coverage, but make sure it's enough to meet your expenses. If not, consider purchasing additional disability insurance on your own. See this article for details.

Having enough insurance coverage can be vital to protecting your new family unit's financial security if something unexpected were to happen.

5. Create an estate plan

Even if you already have a will, you should review and update it when you get married. Your will establishes how you'd like the assets in your estate to be distributed after your death; dying without one can put a burden on surviving family members. You and your partner should contact a lawyer for more information, and create wills as soon as possible. Then, review them every 3 to 5 years to make sure they address your changing circumstances.  

It's also crucial to review, and potentially update, the beneficiary designations for all your individual and company-provided benefit plans (including retirement) when you get married - these designations are normally considered along with, or can replace, instructions left in a will. Always make sure to keep your beneficiary designations current. See this article for details.

Money discussions aren't always easy for newlyweds. But, as with any marriage issue, it's best to approach them with an open mind and as a team. The more thoughtfully you work together on money matters, the more financial harmony you'll maintain in your life together.