Congratulations, you are getting married! As fun of a time as this is, and let’s be honest, stressful when it comes to all of the wedding planning, there is one important aspect of your future lives that many newly married couples overlook ñ their finances. I am not talking about sticking to a budget when planning the wedding or anything like that. What I am talking about is looking at and understanding how your financial lives are going to change. In this post, I will walk you through some important items that need to be on your financial checklist so that your finances are in great shape for the many years after the wedding.
4 Financial Items You Need To Address
#1. Payroll Taxes
You need to look over and adjust the amount of money you are having withheld from your paychecks. Up until now, you were having payroll taxes withheld based solely on your income. Well you are now a two income house and this has an impact on your taxes.
What is important to understand here is that for tax purposes, whatever your legal status is come December 31st is what the IRS assumes you were for the entire year. So if you are married on December 31st to your spouse, then you are considered married for the entire year, regardless of the actual date of the ceremony.
If you are married late in the year, you might have some large adjustments that need to be made to your withholdings so that you don’t owe a huge chunk of money to the IRS and even potential fees for under-withholding.
To help you figure out how much you should be having withheld, you can use this worksheet from the IRS.
#2. Health Insurance
Another financial checklist item to review is your health insurance. Since most people get coverage from their employer, some people have great plans and others have not so great plans. It is important you look over the plans both of your companies offer and determine which one is best for your household needs.
One word of caution here is to not simply choose the plan with the lowest premium or the lowest out of pocket expenses. Look at the whole insurance coverage and figure out that is the best coverage you get for your money.
Some couples make the mistake of waiting until open enrollment to make these changes, thinking that is the only time they can be made. But the truth is you can change your coverage anytime throughout the year if you have a life-changing event, such as a marriage, birth of a child or a divorce. So don’t wait to make changes, do it now!
Another often overlooked area is beneficiaries. Now that you are married, you need to update your beneficiaries. The reason for this is because any beneficiary you designate overrides your will.
In most states, if you are married and pass away, your assets will go to your spouse unless you name someone else on a beneficiary form. So if you have your Uncle Vinny as beneficiary to all of your bank and brokerage accounts, if you pass, your spouse gets none of this money, it all goes to Vinny. Your spouse could go to court and try to fight for the money, but that could get ugly.
The point is to update your beneficiary forms to name your spouse as the beneficiary unless you want someone else named. If you do choose someone else, be sure to talk this over with your spouse so they understand why and are not surprised if something happens to you.
And while we are talking about speaking with your spouse, you need to plan monthly financial meetings. In many relationships, one spouse handles the money and the other one is left in the dark. This can lead to some big issues.
First, if you are barely making ends meet and your spouse goes on a spending spree, things could get ugly. Second, if you handle the finances and pass away, your spouse is clueless. While you might not think your untimely passing will happen, I have seen it happen many times when working for a financial planner. It is not fun seeing the other spouse not only emotionally distraught but also completely clueless about the finances.
So sit down at least monthly and go over the finances. Try to keep it basic and interesting so that the meeting doesn’t feel like a chore or punishment.
There are the four most important items on your financial checklist when you get married. There are other things you need to take care of financially when you get married, but these four are the most time sensitive. Don’t overlook them or push them aside. Addressing them now will help both of you to be on the same page financially and also help you to reach your financial goals more quickly in the future.