PLANNING THE PRE WEDDING AND POST WEDDING BUDGET

Q. What should couples consider about their finances before tying the knot?
A. Before you get married, each of you should prepare a statement of what you own and what you owe and share it with your spouse-to-be to ensure you both understand the financial union you are entering into. Talk about what your expectations are for each other in terms of sharing paychecks, paying on car or student loans, merging bank accounts, paying bills, balancing bank statements, etc. Newlyweds have enough adjustments to make so now is the time to talk and tackle any challenges as a couple.

Q. What tips can you share for merging bank accounts?
A. Generally it is easier for one of the partners to be in chargeof the account and ideally that person should be the “number cruncher” of the couple. The account should be balanced monthly in order to ensure that all checks, ATM withdrawals, debit card transactions, car payments, etc. are entered into the check register. The current account balance should always be known in order to avoid making charges against insufficient funds. Overdraft fees are not only expensive—they can hurt your credit rating.


Q. What advice do you have for newlyweds who are creating a budget for married life?
A. Be realistic. You probably know with some certainty how much you will be earning together and what your joint monthly obligations are for rent, car payments, and utilities. But chances are you are spending more than you think on such things as eating out, movies, lattes and other entertainment. Be sure to set clear expectations with each other about your spending and saving habits. Also, try to set aside as much as possible into a joint savings account each month.

Q. How much should couples try to save every pay period?
A. It’s not as important what percentage of your income you save as much as it is to develop the habit. I always suggest building an emergency fund first. In today’s volatile economy you never know when one of you may be laid off from a job through no fault of your own. I suggest trying to build a savings of at least three months of living expenses—and six months is better. Once you have an emergency fund, develop a retirement savings regimen. Participate in retirement savings plans including 401(k)s and Roth IRAs. If your employer contributes, that’s better yet. Don’t miss that opportunity to save even more.

Q. With marriage come more credit cards, and more debt. Any tips?
A. Confront the situation head on by determining how much you owe, who you owe it to, and the terms of these obligations. Pay down the credit card or loan with the highest interest rate first and work from there. Try to exceed your minimum payment as much as possible and you’ll be surprised by the progress you’ll make. Your goal should be to eliminate credit card debt and only use credit cards in the future if you can afford to pay the balance in full each month.

Q. What are some of the financial benefits to being married?
A. There are obviously tax incentives for being a married couple, but beyond that, I would say the biggest advantage is that married couples are a team working toward common financial goals, versus a party of one. They may also have the advantage of bringing home dual incomes. If one spouse were to become unemployed, the second income could serve as a safety net. If one spouse stays at home, that can have benefits as well. For example, if the couple has children, the money saved on child care could offset working costs. As someone who’s been married for 32 years I can say there are many benefits to having a partner in life, and in many cases, this is a good thing for your bottom line.

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