Guidance

RESOURCES TO HELP SHAPE YOUR FINANCIAL FUTURE

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Jennifer Marlowe, FPQP
Senior Financial Consultant
Wintrust Investments

For newlyweds settling into the bliss of a new life together, the topic of finances may seem terribly unromantic. However, a discussion on the topic at the early stages of marriage may be one of the most important ones you will have to ensure financial fidelity.

The first step in developing a new financial arrangement is to create a net worth statement. This should include all assets (savings, investments, real estate, etc.) and liabilities (credit card debt, school loans, etc.). If you have not already discussed income and credit scores, now is a good time. With this information in hand, you can begin to formulate a household budget. If you are unsure as to how you have been spending in the past, track it for at least a month to get a better idea of expenses.

On the other side of the budget equation is savings. Whether for new furniture in six months, a new home in two years, or retirement in a beach house in 30 years, you will need a plan. Begin developing yours with an emergency savings account with 3 to 6 months of living expenses to allow for unforeseen expenses (loss of a job, medical emergencies, etc.). Keep the funds in a liquid, interest-bearing account that allows for immediate withdrawals.

Next is retirement savings. Ideally, you are both already participating in employer-sponsored retirement plans, contributing the maximum allowable amount, and receiving an employer match. If you cannot afford the maximum allowable amount, contribute at least enough to earn the employer match (otherwise, you are turning away free money). If an employer-sponsored plan is not an option, consider contributing to a self-directed individual retirement account (IRA), and speak with a financial advisor about which type of IRA is best for you.

Deciding how to protect your assets is another important step. If both of you are covered by separate healthcare plans, consider spousal options with plans offered by your employer. In addition, employer-offered life and disability insurance can be an attractive option. Additionally, if you each have cars registered in your own names, combining them into one policy may qualify you for a multi-car discount. Policy rates tend to be lower for married drivers, so be sure to notify your carrier of your change in marital status. In addition, review your combined household possessions to determine if renters or homeowners coverage is adequate. Bear in mind that most policies have limits on jewelry so you may need to add a rider to cover rings. Finally, make sure you are also protecting your union by updating any beneficiaries, wills, and healthcare directives.

While these financial discussions are not always easy for newlyweds, you will want to approach it with an open mind. Talking to your spouse in an open and honest way is an important step in building your financial future together. Contact a Wintrust Wealth Management Financial Advisor to help you develop a plan for your financial future.