This article was written by Zina Kumok, a personal finance writer.
Getting married is full of traditions like big weddings, white dresses, and celebrating with those closest to you. But marriage is also a legal and financial event that binds you to another person. With that comes a slew of important changes that you’ve never had to consider before. Marriage isn’t just about loving someone enough, it’s also about trusting them with your finances, and building a new life together.
Read on to see what you need to do before and after you tie the knot.
How to Build Your Joint Budget
Budgeting by yourself is a challenge, unless you were blessed with endless willpower and unbreakable discipline. Budgeting with your spouse? That’s even harder.
Before getting married, you and your partner need to decide how you want to budget (including what you want to spend on the wedding). This conversation can dictate how future money talks will go, so be understanding and patient. If your significant other gets uncomfortable, explain why this is important to establish.
First, lay out all your financial cards on the table, including your take-home pay, how much debt you have, how much you’ve saved, and how much you spend. If you have debt such as student loans, create a plan to pay it off as soon as possible.
Discuss your financial goals and how soon you want to achieve them. These can include buying a house, starting a business, going on a three-week cruise to Europe, or having a family. Then, look at your expenses to see if you need to make any cuts to reach those goals.
Decide how you want to budget and how often you want to go over expenses. Some people like using an electronic system like Mint or You Need a Budget while other couples prefer pen-and-paper. Build budget meetings into date nights and make money a regular topic of conversation. If you start to regularly disagree about financial topics, consider visiting a therapist to learn to discuss those issues calmly. Remember, money issues are one of the biggest reasons for divorce — and student loans specifically are cited as a pain point in one in eight divorces.
Many couples find success with separate slush funds in individual bank accounts. If you want to buy concert tickets, you pay for them out of your own discretionary fund. If your mate wants to splurge on a custom suit, he can use his account. Doing this keeps couples from judging each other’s expenses and lets them have a sense of autonomy over their money.
Decide on a Prenup
People used to think prenups were only for a small segment of the population. Now, they’re becoming as standard as engagement photos.
A survey from the American Academy of Matrimonial Lawyers found that more millennials are signing prenups before walking down the aisle. Part of the reason for the increase is that millennials are getting married later in life. They’re not settling down fresh out of college with no assets to their name, so marriage is coming at a time when they have careers and retirement accounts they’ve built on their own.
If you and your sweetie are still in the wedding planning phase, sit down and seriously consider a prenup. Most lawyers recommend them if one or both parties are bringing significant assets or debts into the marriage. For example, if your future husband has significant student loans, you want to make sure those are still his responsibility in case you split up.
Each party should have their own lawyer look at the prenup so the needs of each party are being considered. If you use the same lawyer and end up getting divorced, a judge could nullify the prenup due to a perceived conflict of interest.
Already married and didn’t sign a prenup? It’s not too late to sign a postnuptial agreement, which is as effective as a prenup.
Learn About Your Insurance Options
Once you get married, you’re eligible to be on each other’s insurance policies which can often save you money. Shop around for different car insurance policies and bundle those quotes with a renters or homeowners policy.
Health insurance is another big question for newlyweds and those planning to get married. Ask your HR rep how much a family policy will cost compared to your current policy. Sometimes you’ll spend more money by having both people on one plan, but it never hurts to ask.
If you have a mortgage together or plan to have children soon, look into buying term life insurance. Life insurance protects your spouse in case of your death and ensures they don’t have to change their lifestyle if you pass away. It’s best not to wait because premiums increase as you age and buying term life when you’re young locks in the best rate possible. To calculate how much life insurance you need, multiply your current income by how many years your spouse would need support and add that figure to any debt you have, such as a car loan or mortgage.
Set up a Will
Almost 80% of millennials haven’t set up a will, either because they don’t think it’s necessary or because the thought of their impending death is too depressing. No matter what your hesitation is around a will, it’s a vital financial and legal document you and your spouse need to have. If you currently have kids or plan to have kids, your will is also where you’ll designate who gets custody if the worst should happen.
Use writing the will as a time to take stock of all your financial accounts, add both parties to the accounts, and create a list of all relevant information. A will should not only include how you want to divide assets, but also a comprehensive list of all your assets.
If you already had a retirement account or savings account set up before you got married, check who’s the beneficiary on that account and change it to your spouse if you want. You can create a will online for a small fraction of what a lawyer might charge. Just make sure the will complies with your state’s laws. To double check, use an online tool to make a will and then pay a lawyer a small fee to look it over.
Nowadays, wills should also list relevant account numbers and passwords. Use an app like LastPass that will aggregate all your passwords in one secure location.
Once you’ve set out your thank-you notes and unwrapped your wedding gifts, consider giving your finances a makeover. Your budget — and your marital happiness — depend on it.