Getting married is exciting, but it also brings many challenges. One such hurdle is managing the merge of financial resources. Careful planning and communicating clearly are important, because financial decisions made at the start of a marriage will have a lasting impact on the future.
Dec 20, 2014 /prREACH/ -- The first step in mapping out a financial future together is to discuss individual and joint financial goals. Start by making a list of short-term goals (e.g., paying off wedding debt, new car, vacation) and long-term goals (e.g., having children, college education, retirement). Then identify which goals are the most important and focus on achieving them.
Prepare a budget Next, prepare a budget that lists all income sources and expenses over a certain interval (e.g., monthly, annually). Add up the income and expenses and compare the two totals. Hopefully, the result is a positive number, meaning that expenses are less than earnings. If this is not the case, review the expenses and see where they could be reduced.
Bank accounts-- separate or joint? At some point, newly weds must decide whether to combine bank accounts or keep them separate. Maintaining a joint account does have advantages, such as easier record-keeping and lower maintenance fees.
Credit Cards When both spouses have joint credit, both will become responsible for 100 percent of the credit card debt. Additionally, if one spouse has poor credit, it will negatively impact the credit rating of the other. If one spouse does not get approved for a card as a result of poor credit, it is possible to give account privileges without making them a joint cardholder. That way there is no joint liability for amounts charged to the account and account activity won't appear on the authorized user's credit record.
Insurance If each spouse has separate health insurance coverage, do a cost/benefit analysis of each plan. One health plan may have a higher deductible and/or co-payments or fewer benefits than the other, so it may be best for one soouse to join the other's plan.
Examine auto insurance coverage, too. Many insurance companies offer a discount for insuring more than one car. Take driving records into account, as this may affect the premiums.
Employer-sponsored retirement plans.
If both spouses participate in an employer-sponsored retirement plan review each plan carefully and determine which plan provides the most ideal benefits. If possible, participate to the maximum in an individual plan at work. Here are some helpful tips for retirement planning:
- If both plans match contributions, determine which plan offers the best match and take full advantage of it
- Compare the vesting schedules for the employer's matching contributions
- Compare the investment options offered by each plan-- the more options offered, the more likely the investment mix will meet the retirement goals of the marriage partners.
About David Lerner Associates Inc
Founded in 1976, David Lerner Associates is a privately-held broker/dealer with headquarters in Syosset, New York and branch offices in Westport, CT; Boca Raton, FL; Teaneck and Princeton, NJ; and White Plains, NY. For more information contact David Lerner Associates Cal 516-921-4200 Visit their website: http://www.davidlerner.com
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