Marriage & Financial Planning: Challenges to Consider


When you marry, you merge hearts, minds -- and finances. Someone else gets a say in how you spend money, how much debt you take on and what your financial goals should be. The "Wall Street Journal" notes that money fights are one of the top issues for couples. Talking about money with your spouse may feel awkward at first, but it's a talk that needs to happen.

First you plan the wedding, then you plan your financial life together.

Talk About Financial Plans Together

Part of adult independence means managing your own money, but marriage is a different ball game. "Couples have to answer to each other for their spending and sometimes it is difficult for some to accept, since they only had to answer to themselves for their spending," says John Phillips, a CPA in Fort Walton Beach, Florida. "Still," he adds, "married couples should always talk to each other before making a 'big ticket' purchase." Along with joint decisions on furniture, a new car or where you go on vacation, you may also have decisions about which bank, insurer and accountant to use. If you both have workplace health insurance, for instance, you may save money if one of you drops his plan and goes onto the spouse's policy.

Decide on Joint or Separate Accounts

One question a lot of couples face is whether to keep separate bank accounts or start putting their income in a joint fund. Phillips recommends keeping separate accounts, plus an emergency joint account. In this approach, spouses are each responsible for paying some of the bills from their own account, plus contributing to the joint account each month until they have six to nine months' worth of expenses in the emergency fund. Keeping separate accounts is important, he says, because debit cards are so common. With two people each drawing on the same account with a debit card, it's easy to lose track of money and wind up with your account in the negative.

Prepare for the Cost of Children

Financial planning for many couples includes planning for the cost of kids. "Not only do expenses increase significantly," Phillips says, "income may decrease for a period after the birth of the child.  Once the stay-at-home parent returns to work, they have to consider the cost of child care, etc." If you know you want children, figuring out the finances ahead of time is a smart move. Phillips says it's also important to think about all the paperwork you need to update or change as your family changes. For instance, you may want to update your will, increase your life insurance coverage or change the beneficiaries on your 401(k).

Set Long-Term Goals

Financial planning for long-term projects is another area where spouses usually need to talk. Your top priority may be paying off credit cards and student loans, while she wants to save enough to make a down payment on a house. The two of you have to work out which goal to shoot for first, or whether you can work on them both at the same time. Phillips says working on long-term goals is often easier after you're married: for example, you only need one home, which saves you a lot on housing costs.

Prepare for Tax Time

Part of your financial planning involves making tax decisions together. For example, Phillips says, the two of you must decide whether you want to file a joint return or two married-but-separate returns. The IRS says joint filers usually come out ahead, but there are exceptions, such as high earners whose joint income pushes them into a high tax bracket. You may have to do your taxes both ways to decide which is best. Phillips says if one of you is self-employed and you're filing jointly, you'll have to budget for estimated tax payments -- the self-employment equivalent of withholding -- based on both partners' income.

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