MOST NEWLYWED couples tread lightly when it comes to discussions about money. And they have reason for doing so – money is the number one cause of arguments between married couples. But that doesn’t mean it needs to be. In fact, having an open and honest dialogue about finances can strengthen your relationship.
Forbes recommends these tips for starting your newlywed finances on the right foot:
• Talk about your financial goals, memories and habits. This should help both of you further understand one another’s point of view and approach to finances.
• Take a look at the numbers. Consider the money for three things: emergency funds (three to six months of essential bills), one-to-five-year goals (down payments or vacations) and long-term goals (child’s education or retirement). For life goals, have an honest and realistic discussion about what you want from your life together and what you can afford.
• Create a budget. Consider essential costs and discretionary spending. If you’re unsure how much you spend in each category, track your spending for at least a month. Forbes recommends saving 20 per cent of your take-home pay – 10 per cent towards emergencies and 10 per cent toward retirement.
• Decide how to set up your accounts. There are three options: all joint accounts, a combination of joint and separate accounts or entirely separate accounts. If you have largely different spending habits, the second option could help head off future fights over expenses.
• Designate a bill payer and a weekly or biweekly money meeting. One person should be in charge of paying the bills but the other should always be aware of what’s happening.
• Talk about how you’ll deal with friends and family in need of money. Agree upon a policy for such situations. Each situation needs to be evaluated by you both so that there is no confusion or anger about the decision.
• Call your accountant. Talk to a professional and decide whether it makes sense for you to file taxes jointly or separately.
• Update all your beneficiaries. Most likely, you’ll want to update your list of beneficiaries to include your spouse. A beneficiary is the person who will receive the benefits of
a will, trust, life insurance policy or other
financial account.
• Give your spouse power of attorney and designate him or her a health-care proxy. By giving your spouse power of attorney, he or she can make legal decisions about your property and finances. When you name your spouse health-care proxy, discuss what you would like to have happen should you become incapacitated.
• Create or update your will to include your spouse. If you don’t have a will, the state will make decisions for you. It’s especially important to have a will if you have children.
• Update or reevaluate all your insurance policies. See whether it makes sense for you both to be on the same health insurance plan and, if so, which plan gives the best coverage for your situation and for the cost. Be sure to put your spouse on your vehicle policy for auto insurance and also meet with a broker to review your homeowner’s insurance.
Jordan Rzad is the senior director responsible for internet marketing at Houston Better Business Bureau.