Financial Planning for Married Couples

If you are preparing for marriage, you will need to review your current financial plans to incorporate the opinions of your spouse and ensure a happy marriage life with lesser arguments over money issues. Depending on how each person manages their money, you may find that combining two income and resources can make or break the best financial plans if you are not careful.

Try a financial compatibility test designed for married couples. In recent years, household finances is becoming a big reason for break ups among married couples. It is important to understand the diverse goals and plans of your spouse, and how to best reconcile the differences. Such monetary issues are best sorted out via premarital counseling, or it can resurface in future as a bigger problem. This is especially true when one spouse earns a bigger income share and tries to dominate all expenditure decisions in the house.

Keep separate finances or open a joint account

Many couples who are working and earning separate incomes tend to choose to maintain separate investment and checking accounts, especially when they have different spending preferences and saving propensity. This also applies to investments because they may have different risk appetites and prefer different types of investment products. On the other hand, some people feel that it is better to pool their finances together and let the more financially savvy spouse manage their money.

Generally, you can choose a hybrid approach where each spouse can keep some of the assets separated while saving money together for major expenses such as paying the home mortgage, holiday trip, children’s education etc.

On the other hand, people who have been through divorce are more likely to choose keeping their assets well separated due to their prior experience. Do note that in the event of divorce, money that belongs to joint assets will be divided equally.

If one or both spouses get employee benefits, learn how to make full use of employee benefits such as cheaper group health insurance, retirement savings plan etc. For example, you may find that the husband’s employer has better retirement investment returns, so you can use that for the wife’s retirement savings as well. Try to periodically review financial net worth for both spouses at least once a year. A good time to do so is while filing your tax returns.

Review life and disability insurance coverage for married couples

If both husband and wife are earning independent incomes, check whether the current coverage amount is sufficient or you may need to buy more income insurance. Note that when discretionary budget is limited, it is more important to buy life and disability coverage on the spouse that is financially providing for the family. This is to ensure that the family can still manage financially if the breadwinner pass away or is unable to work due to medial conditions. The insurance pay out will protect against the loss of income. Consider buying long term care insurance as this is becoming a major medical expense during your retirement years.

If you have existing life insurance or retirement accounts, you may need to appoint new beneficiaries that will receive the value in these accounts after you have passed on. Most people named their parents or siblings as beneficiaries in life insurance policies, and may consider to add their spouse as an additional beneficiary after they get married.

You should update your will when you marry or make a will if you have not done so. This is a common slip up discovered when we are providing financial planning advice for newly married couples. This will ensure there are no disputes over the distribution of your wealth and assets, and you can have precise instructions on who will receive your inheritance. Otherwise, the state will assign an estate administrator to distribute your assets according to the laws applicable and your heirs or dependent have no legal power to change that decision.

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