Newlywed Finances

I take thee to be my wife - to have and to hold, for richer or for poorer. I promise to love and cherish you, to protect your large assets, forsake my bad spending habits, to assume your student loans and share my good fortune....

Planning for your financial future as a married couple is imperative, since finances tend to be the most common trigger for marital conflicts and divorce. To guard against money disputes, it is extremely important for couples to openly discuss financial matters before saying, "I do."

Consider the following steps to avoid surprises and foster a profitable, financial partnership:

1. Disclose your financial background
Don't wait until the honeymoon is over to discover that your fiancee has mountainous loans, outstanding late payments and bad credit. Exchange financial documents including credit reports, tax returns, account statements and paycheck stubs. Free credit reports may be requested from annualcreditreport.com.

2. Talk about money management
Establish a budget. Share how money management was portrayed in your upbringing. Talk about your current ideas about spending, saving and borrowing. Define what constitutes a major purchase and when you should consult one another about a purchase. Decide who will be responsible for paying bills and balancing the checkbook.

» Try our budget calculator

3. Consider joint and separate accounts
Make your money work harder for you by pooling your savings accounts into a tiered-rate money market or certificate, which earn higher dividends the higher the balance. Both of these savings vehicles earn more than a basic savings account.

Determine whether you will share or keep separate checking accounts. Some people believe joint checking accounts signal their commitment. Others believe separate checking accounts foster self-worth and help to avoid secret stashes. It is important to make this decision as a couple. Remember to consider that joint accounts will help to minimize service fees (if applicable) and will earn higher dividends in tiered accounts.

4. Build individual credit
It's a good idea for each person to have a credit card in his or her own name in case of the death of one partner, divorce or, simply, the desire to apply for something individually.

Having separate credit doesn't mean that your spouse's credit does not impact you. If you apply for a loan where both incomes must be considered, such as a mortgage, both credit reports will be weighed. Or, consider that one partner has good credit and one delinquent. If the former qualifies for a loan individually and puts the latter as a signer, the person with good credit will not be negatively affected by the bad credit, but the person with bad credit will gain creditability.

5. Start saving for retirement immediately
Begin a disciplined savings plan early. Compounded interest is your strongest ally. Let's compare two hypothetical scenarios.

1. Bill and Sally Smith make monthly deposits of $100 for ten years, then stop and let their savings grow.
2. John and Jane Thompson don't make savings deposits for 10 years, then make monthly deposits of $100 for 40 years.

Look at the dramatic results. The Smiths' total investment in year 40 is only $12,000; however, the Thompsons invested $36,000. At 8%, the gap between the couples widens every year. The Thompsons can continue depositing $100 per month for the rest of their life, and will never catch up to the Smiths.

» Try our savings calculator

Take advantage of services provided by our Wealth Management team
Within the first year of your marriage, schedule a free consultation with a Wealth Management representative who can help you in investments, insurance, money management, retirement plans, spending plans and much more. Wealth Management service is an extension of your credit union benefits.