Marriage is on of the most important decisions you will make in your life. If you are lucky enough to have found someone you want to spend the rest of your life with, make sure you take the steps to ensure your marriage success. Nearly 50% of all marriages end in divorce. Even more staggering is that about 90% of marriage breaks have their origins in money problems. It is important to have a joint financial plan which both parties agree to and are comfortable with. Fully understanding what the financial future holds is important. When questions arise within the marriage the “plan” can be used to address and mediate these problems.
The first question that needs to be asked is “Who is responsible for handling the money?” This is a question that most people never consider before tying the knock. There is often an assumption that the other person is handling everything and then you find out that no one is controlling your finances. It is important that, as a couple, if you are planning on investing, that you have the financial stability to be able too. Make sure you decide on who is going to handle the checking, savings, investment, and emergency accounts. Who will be responsible for doing the investment research and monitor your growth. In addition, plan on having regular meetings in which you chat about your finances and investments. Couples usually do not discuss money unless they are in the middle of an argument and obviously nothing can be resolved then.
Another issue that will directly affect if, when, and how you invest is if both people are going to work. If both people are going to work will it be full or part time. This is important because having a budget and knowing exactly what your expenditures are, will reveal what available funds you have to invest. Additionally, if you have children who will be staying home with them? Obviously two incomes can allow for more investing however a single income, if used correctly, can be manipulated in such a way that it covers all necessities, a few luxury, and long term investment.
The topic of joint or separate checking accounts is a conflict which a married couple probably won’t see until well into their marriage. At that point the problem is unresolvable. Make sure you decide if you will have joint checking, savings, investment accounts or will each person have their own. Many people share a joint checking and saving which money from both incomes is deposited into for household expenses. Then there can be joint investment accounts which will benefit the whole family. Due to companies offering their employees 401K and IRAs, those should be kept separate.
Make sure you chat about what each person’s long and short term goals are. After ten years of marriage you don’t want to find out one person has longed to retire early and sail around the world while you have envision something much less adventurous. Knowing long and short term goals will allow your financial advisor to diversify your investments in such a way that each of your retirement dreams can be achieved.
Most pre-marriage planning has to do with the wedding. Very few people have the foresight and the will to actually plan a marriage. Take the time and effort to openly discuss money and investments. Being true partners before marriage and solving the conflicts before they happen will not only make your wedding day less stressful but may, in the end, save your marriage.
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