By: Elizabeth Brasher, J.D., Client Consultant, Waverly Advisors
Wedding season is in full swing during the spring and summer months. While the wedding is a joyous celebration of love, the marriage itself requires work. This is especially true when it comes to managing finances and establishing a strong financial foundation.
Fidelity’s 2021 Couples & Money Survey found 20% of couples believe money poses the greatest challenge in their relationship. It doesn’t have to be that way! Our team works closely with couples throughout their relationship lifecycle – from pre-marriage to late-in-life planning – to help them plan effectively, communicate efficiently and work together to establish shared goals.
These are the top tips we provide our soon-to-be-wed and married couple clients to set them on a path for wedded financial bliss.
Accounts can be individual or joint but your financial priorities need to be united
There are countless financial decisions married couples need to make – from everyday spending on groceries and other necessities to budgeting for big-ticket items like vacations, college education and retirement. When we meet with couples in premarital counseling, we start the conversation with goals to open the dialogue around wants and needs as the couple comes together in their married life. Even couples that opt to keep their finances separate still need to define common goals.
As with all aspects of a relationship, honest communication is essential to remain aligned in life and financial objectives. Be honest with your partner about your priorities and how you want to spend money, both now and down the road. Early in a relationship, it can be easy to overlook your significant other’s coffee spending or investment in a favorite hobby. However, as the relationship progresses, these spending habits might present challenges. Once you have an idea of your priorities individually and as a couple, you can work together to set some common savings goals.
Ensure your plans and legacy are safeguarded
Marriage presents a whole new set of opportunities and challenges, including how you structure beneficiaries on accounts. Take time to review your estate planning documents, your will, healthcare power of attorney, your 401(k) and other investment accounts, and other important documents before you walk down the aisle.
It’s important to review these documents through a legal lens. Laws vary by state. For instance, in my home state of Alabama, if you die without a will in place, your spouse receives a portion of your assets, and the remainder is divided between your parents and spouse. In most instances, married couples prefer to leave all assets to the spouse but if these wishes aren’t clearly outlined in a will, the legal precedent will prevail.
Blended families face distinct challenges
When a couple comes together in a second marriage or a situation where children and others are involved, it becomes a more complex planning picture. Our team’s approach to planning for the couple remains the same, but the execution and details are unique to the couple and their situation.
More often than not, couples in this scenario are marrying later in life and have significant assets. It becomes even more important that these assets are well-protected and the couple is aligned in how individual and joint assets are managed. We encourage couples in this situation to engage in more challenging dialogue, particularly regarding children and how they will (or won’t) be supported.
Planning for the unknown is key. While you may not be thinking about your teenager’s desire to go to graduate school now, it may come up in the future. It’s more productive to openly discuss how you might approach the financial implications of this now rather than in real time when emotions are likely high.
We feel it is important for the couples we work with to be aligned with one another in their thinking and goals, as well as with us as their financial advisor. It’s never too early to schedule a check-up with a financial professional, who can help you strategically pursue your goals. We work diligently to meet both spouses where they are, ensuring every voice is heard as we navigate difficult discussions.
My goal is to plan for today, tomorrow and 10-years from now. Oftentimes, my clients haven’t thought as far down the road as they should. These conversations facilitate open communication about near- and long-term goals, while setting up a strong foundation for the newlyweds.