First of all, congratulations! Getting married and choosing to spend your life with someone special is a major milestone. It also requires a change in mentality from taking care of yourself, to taking care of two people (and sometimes more!). This is a brief guide on how to adjust to marriage through the lens of personal finances. If you aren’t quite married yet but are under the same roof, many of these are still good practices.
- Discuss how bills will be paid
- Set up a joint checking and savings account
- Discuss whether you’ll also maintain separate accounts and how income will be split between shared and individual accounts
- Create a 5-year plan
- Create a short-term budget
- Update your tax withholding status on your paychecks
- Discuss life insurance and a will
- If you haven’t already, talk about if and when you may want kids
- Combine health insurance
- Celebrate!
1. Decide how bills will be paid
If living under the same roof is new, there are a lot of bills to pay to keep that roof! Decide who will be responsible for which bills and whether they’ll be paid from a shared account or individual account. It’s an easy mistake to make, with both you and your spouse assuming the other paid a bill, only to find a late payment notice and fees attached to the next bill. Should both of your names be on every bill like cable or electric?
Pro Tip: If your spouse has poor credit or a history of making late payments, you might want to handle the bill paying. Adding both of your names, especially on utilities where social security numbers are often required, means that if there’s a late payment, it may show up on both of your credit reports, making it more challenging when you need strong credit like getting a car loan.
2. Set up a joint checking and savings account
Setting up a joint checking account makes it much easier to track spending for budgeting purposes. You know how much you’re spending as a family on groceries, you can see when big payments like rent or utilities are getting paid, so you’re less likely to have a cash shortfall. Happy life means a happy … well you get it.
3. Separate bank accounts or joint bank accounts
Holidays and birthdays. How will you sneak those presents if “$100 to DaySpa” shows up on your joint checking account. Individual credit cards have the same effect, and you can pay them down from the join account, making it a little easier to get a surprised reaction when your gift is opened. Make sure you’re prioritizing the shared account especially if that’s the account being used to pay your bills!
4. Create a 5-year plan
Where do you both want to be in the next 5 years? How will you achieve it financially? It could be to purchase a first (or bigger) home, see the world, have kids. Prioritize your goals, and lay out a plan, how much do you need to save each year to get there, and the actions you’ll take to achieve those savings.
5. Create a short-term budget
A short-term budget is your monthly budget. How much can you save under normal conditions, how much if you stretch? Here’s your guide to putting together a budget.
6. Update your tax withholding status on your paychecks
If you plan to file jointly, you should consider updating your W4 with your employer. With two incomes, you might land in a higher tax bracket, your employer can withhold a little more out of each paycheck so you don’t get a nasty surprise come tax season.
7. Discuss life insurance and a will
Life insurance when you’re young and poor is probably the last thing on your mind. As you get older, have more family responsibilities, protecting the lifestyle you’ve been accustomed to becomes more important. There’s lots of cheap ways to get coverage, just make sure it’s a reputable company. Here’s a guide on what to consider when thinking about life insurance coverage.
8. Kids?
Kids happen even when you weren’t planning it! But, if you have a plan, have you achieved what you want in your career, home, etc.? Is it easy to take off work if they’re sick and still be able to pay the bills? The more prepared you are, the less stressed you both will be.
Kids are expensive (but worth it)! To help offset the cost, the IRS offers a child tax credit, currently $2,000 per kiddo. That’s direct to your taxes, meaning, $2,000 off of the taxes you need to pay, so if you already paid all taxes due through normal paycheck tax withholdings, you’d get a $2,000 refund from Uncle Sam.
9. Combine health insurance
This is a no brainer if your company offers a family plan. It costs more than an individual plan but is almost always less than having two people pay separately for an individual plan. If you both have health insurance offered through your employer, see who has the best benefits or the lower cost plan and decide which to choose.
10. Celebrate!
Marriage is a lot of responsibility but treat yourselves and always leave time to celebrate!
