After spending months or even years planning and budgeting for a wedding, the last thing newlyweds may be up for is discussing their financial future—especially if you have very different spending styles. However, CNBC points out certain money-related issues can devastate your marriage. To ensure that you begin your life together on the right financial foot, discuss your goals and priorities as early as possible—even before you say “I do.”
Once you’re married to the person you love, it’s time to discuss the different types of insurance policies that you and your spouse will need throughout the course of your marriage—including life, health, automobile, and homeowners/renters insurance. Life insurance isn’t mandatory, but it protects couples from financial liability in the event of an untimely death.
You may choose to assign a power of attorney as well, especially if one of you serves in the military, holds a disability, or travels a great deal.
When exploring your insurance options, you may choose to shop around for new policies or merge your existing policies into one. Since married couples sometimes receive better insurance rates than singles, combining your policies into one may provide you with the best deal.
After tying the knot, some couples choose to rent a home or apartment as they settle into married life—while others hope to buy a home as soon as they save up enough money for a down payment. According to Engaged Marriage, many newlyweds attempt a home purchase too soon after tying the knot. This is a big and complicated step, and it’s vital to prepare your finances for it.
If you and your spouse hope to purchase a home within the first year or two of marriage, you’ll increase your chances of achieving this goal if you start saving for a down payment as soon as you return from your honeymoon. As you save, however, it’s also important to consider whether an FHA home loan or conventional mortgage is better for you as a couple. Depending on the type of loan you choose and/or qualify for, the following will vary:
● The amount of your down payment
● The credit requirements you must meet
● The mortgage interest rate you receive
With a conventional loan, you may qualify for a lower interest rate than you would with an FHA loan. However, you typically need a higher credit score and a larger down payment in order to qualify for a conventional loan. As such, an FHA loan may be best if your credit score is low or you can’t afford to make a larger down payment on a home.
Note many lenders offer multiple types of loans, including conventional and FHA loans, and can walk you through your best fit.
When budgeting for your future as a married couple, it’s also important to discuss any savings accounts that each of you may have. These savings accounts may include a household emergency fund or retirement account, and/or other investments like stocks or bonds. Then, discuss your short- and long-term financial goals, such as saving up for a dream vacation or a down payment on your dream home.
Next, discuss your plans for managing accounts as a couple. Will you merge your accounts into one or open a new account as a married couple? While many joint accounts are often beneficial in a marriage, Lawyers.com explains there are some situations in which separate accounts may be best, particularly if one of you has a clean financial history and the other has issues with creditors. If things feel complicated, sometimes discussing particulars with a financial advisor is your best bet.
When you’re tying the knot with the person you plan to spend forever with, discussing these essential topics will strengthen your bond and set you up for a stronger future together. Insurance, housing, and savings are all basics that will guide and safeguard your marriage. Financial planning may seem like an unromantic activity, but it can bring you closer as a couple—and keep you together for years to come.