Living as a couple changes one’s life in many ways. It is not all about you, but about ‘we.’ Money issues play a big role in many couples’ arguments. Misunderstandings occur due to a lack of communication, power struggles, or clashing ideas. Planning for financial responsibilities is vital from the start to enjoy a smooth life as a couple. Couples should understand each other’s financial needs and support each other.
Decide on Estate Planning
Estate planning is essential for retaining and protecting control of your property during your lifetime and determining how to transfer your assets after death. Without estate planning, your beneficiaries may face problems during inheritance. The process of estate planning is easy. First, gather basic information on real estate holdings or any other asset.
Estate planning is confusing; that’s why 74% of Americans postpone it. Next, establish your goals and choose your beneficiary. It can be your spouse, children, or anyone else who matters to you. That said, make sure you update your will, power of attorney, and beneficiaries.
Budgeting for Basics
It is common for one partner to handle the bills and investments and the other to cater to other basic needs. The best way to share financial responsibilities depends on the partner’s income. Couples should be open about finances and adopt a joint approach. This way, both partners will be responsible and avoid overspending. Financial literacy is vital for both partners, from making decisions about the future to handling emergencies. A financial planner can help you plan for your financial responsibilities.
Couples commonly take the time to decide where to live together. One spouse can move into the other’s house or purchase a new home. Although, a couple can opt to renovate the house if it’s old or outdated. Most U.S. homes require renovation because 80% of them are at least 20 years old. House renovation depends on one’s budget and needs, and the first step is to make a budget for all the expenses. You can also decide on home improvement financing if your monthly income is sufficient. How long will the renovation take? How big is the project? A couple should consider all these factors before embarking on the project.
It is best to have investments as a couple. Learn about basic investment concepts and decide what’s right for your family. Seek advice from experts and talk with your partner about what investment plan will help meet your goals. You can invest jointly or separately. It will all depend on your financial flexibility and comfort.
A couple can file their tax returns together or separately. A joint filing is cost-effective, although the couple’s circumstances could be starkly different. Differences could arise if one owns a business and another works for an employer that sends a standard W2 form. Partners can file separately if they don’t want to be part of another person’s business or if they prefer their independence in that realm. If a partner has a loan, deciding on filing separately or jointly may affect the loan repayments and could lead to the partner taking on some of the debt.
Before you say ‘I do,’ couples should disclose their financial status to one another. Let your partner know your debts, assets, liabilities, and responsibilities for extended or immediate family members. Once you know your partner’s assets and finances, sign a prenuptial agreement to protect premarital assets and children from previous marriages. Although one couple’s debt doesn’t become the other’s responsibility after marriage, that debt can still affect your joint finances.
Who pays for the wedding expenses? A couple should plan how much and who will finance the wedding. An average couple spends $22,500 on a wedding or a ceremony. If you are a young couple with little savings, establishing a wedding budget and sticking to it is advised. You can scale back your expectations since the cost can double what you expected.
Most people think of companionship and love when entering a marriage. But it takes more than emotional commitment. Marriage comes with legal and financial commitments. Once you tie the knot, the process will have financial implications. Therefore, couples should be on the same page on finance matters and how to handle them.