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Getting Married and Finances: Everything You Need to Know

This shouldn’t come as a shock to anyone but getting married is a pretty big deal. It’s a commitment to bring together two individuals to create their own family. But it’s not just about two individuals. There are in-laws, potential pets or children involved, and maybe some old furniture that one wants to keep and the other wants to send to the curb.

On top of all of that, two previously independent financial lives are coming together. Finances can be a delicate subject at the best of times and, unfortunately, money issues lead to 22% of all divorces. However, those kinds of issues can be mitigated with good planning and communication. Here are some important money topics to discuss with your spouse to help avoid common challenges and stressors down the line.


To Share or Not to Share?


Getting married doesn’t automatically come with a joint bank account and a detailed budget. Every marriage is different and there are a number of ways for partners to share money and expenses.

Some married couples find it’s best to pool all money into a single bank account and pay all expenses from there. This is definitely best for tracking expenses and keeping each other accountable. There are other arrangements where a joint account is used for essential family expenses and then the remainder of the money is kept separate. And then there are some couples that keep everything separate and manage bills or expenses from their own individual bank accounts.

There is no right or wrong way out of the options above. Communicating and making sure both partners are on the right page is the real key.


Married with Benefits


Health insurance definitely isn’t a romantic topic sure to dominate the honeymoon. Regardless, getting married can have huge implications on health insurance. If both spouses have insurance through their employer, then they will be able to add the other to their plan. But it’s about much more than getting a new direct billing card with both names on it.

With two plans, you can now coordinate benefits to make the most of coverages and keep costs low. Many private insurers that offer employer plans give members the ability to adjust their plan once per year or whenever a major life event occurs. Marriage, in most cases, qualifies as a major life event.

Make a night of it and sit down to coordinate benefits between both plans. It may not be the most exciting night of your marriage but it will certainly pay dividends in the long run.


Plan for the Unexpected


Getting married is one of the happiest moments most people will experience in their entire lives. It can be difficult to pivot and discuss unexpected events like premature death, severe illness, or disability. However, these difficult conversations are incredibly important. Spouses depend on each other for everything including financial wellbeing. The unexpected loss of a partner or a severe illness can have devastating effects across all areas of the marriage. This is all made even more challenging when children or other dependents are involved.

Upon getting married, having a will and power of attorney documents created or updated is essential. These documents provide clear instructions as to what you wish to happen should you pass away or are unable to make decisions about finances and health. They also can direct money to beneficiaries, outline funeral arrangements, declare an executor, or provide healthcare directives.

In addition to having a will and power of attorney documents drafted, it may also be important to look into insurance to protect your dependents. This could include life insurance, critical illness insurance, or disability insurance.


Credit Where Credit is Due


Credit is a big part of the overall financial picture. A good credit score means getting approved for that dream home, getting the best rates on loans, and generally having more access to a range of financial products. In marriage, both spouses’ credit scores are taken for joint applications. A spouse with poor or limited credit history can negatively affect the application.

When married, it may be prudent to consider joint credit products like a small credit card or line of credit to begin with. This is especially important if one spouse needs to build or improve their credit before submitting a major application like a mortgage pre-approval.


Tax Season for Two


There are some tax benefits to being married. Determining whether to file jointly or separately may have an effect on the total amount owed or refunded when all is said and done. While being married won’t make that tax obligation vanish into thin air, there are some credits that can be combined with a spouse. One example of this is combining the tax-free capital gains on the sale of an eligible property.

Taxes can have their own unique challenges at the best of times. Adding another person onto your tax filing can be an additional wrinkle that you didn’t think about while you were standing at the altar.

Thankfully, our team here at Cukierski and Associates has the knowledge to help you navigate many of marriage’s financial challenges. With over 40 years of experience in business and a trusted team of experts, we can be your second most important partners as you navigate life with your number one partner.

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