Couples can choose a number of different strategies for integrating their finances when getting married. Regardless of how you and your partner decide to deal with your shared finances, there are a few things you need to do shortly after getting married. These steps will help you save money in the long run and also ensure you stay on the same page financially.
In any marriage, money can become a major source of stress without open communication and a shared plan. For that reason, it’s critical that you and your spouse take the following steps together and work collaboratively toward your continued financial health. These important financial to-dos include:
1. Examine your employee benefits.
One of the first things you should do is look at your employee benefits plan to see if your spouse can be added to any coverage. Often, employers provide dental or vision insurance to spouses, in addition to health insurance. Furthermore, many companies provide disability insurance, which becomes especially important in households with only one working spouse. Sometimes, flexible spending or health savings accounts cover your spouse’s medical expenses. If you and your spouse both work, compare the different benefits offered by each employer before choosing whether to add yourself to your spouse’s plan or vice versa.
In addition, you and your spouse should talk about which retirement investments make the most sense. If one employer offers better investing options or lower fees, it makes more sense to max out that contribution first.
2. Reconfigure health insurance coverage.
People don’t always know that marriage qualifies as a “life event” permitting changes in insurance coverage outside of the open enrollment period. Regardless of the source of your health insurance, whether an employer-sponsored plan or one purchased from the marketplace, changes can only be made within a small window after marriage. Both you and your spouse should investigate the cost of adding another person to your plan and the type of coverage the plan provides. Sometimes, plans that offer better coverage charge more for dependents, so it’s important to figure out the benefits and total costs of each option before making a decision. In some cases, it may make the most sense for you each to maintain your independent coverage. This may be the case if you have already paid a lot toward an annual deductible. In addition, keep in mind that plans purchased with a subsidy will have new tax ramifications after you get married.
3. Update all forms of insurance.
Once you’re married, you and your spouse should combine your auto insurance to get a multi-car discount. Sometimes, simply changing your marital status can come with a discount on your current policy. Or, you may want to shop around for the best rates when you combine your policies, especially if you’re moving to a new area. The same holds for homeowners’ and renters’ insurance. Sometimes, you can consolidate all of these forms of insurance and receive an additional discount.
It might also be necessary to obtain or adjust personal property coverage when combining households or in the case of a large wedding gift. Plus, you can get special coverage for valuable belongings like your wedding rings. You and your spouse may also need additional coverage that you did not consider before, such as life insurance, especially if you plan to have children or if you have a mortgage. Life insurance is also critical if only one spouse works, or one makes considerably less than the other.
4. Build a mutual budget.
As previously stated, you and your spouse may have different styles when it comes to combining finances. Regardless of how you choose to integrate your finances, you need to talk about a shared budget for the expenses you’ll incur together. This budget should account for how much you and your spouse bring home and your individual debts. You both should be on the same page about how to save for the future most effectively, from short-term emergency funds to long-term retirement plans. Working together to build a budget is really an exercise in disclosing financial information to prevent surprises down the road. While you each may have individual goals, it is important to have ongoing conversations about how to balance these with mutually shared financial aims.
5. Make changes to beneficiaries and wills.
Marriages often come with a lot of paperwork and many hoops to jump through, especially if one spouse chooses to change their name. Some details that can fall through the cracks include updating beneficiaries and wills. You should generally designate your spouse as a beneficiary for 401(k) plans and other employee-sponsored accounts, as well as investment accounts, IRAs, and bank accounts. The beneficiary designation ensures that your spouse will inherit your account should something happen to you. While this information can be outlined in a will, having names directly on accounts makes the process much easier.
In addition, you and your spouse should create a will if you did not have one previously, or update an existing document. If you have considerable assets, an estate planning attorney can help identify the best arrangement for everyone’s needs.