Financial Planning for Couples

It’s one of the happiest times of your life: You’ve said “yes” to your best friend, and now you’re ready to start a new chapter together. 

But planning a future as a couple means you’ve got to think beyond your wedding day. Between the cake tastings, venue visits and everything in between, it’s a good idea to schedule a talk with a financial advisor. Starting a financial plan now can help ensure that you and your fiancé get a jumpstart on all your goals, whether that’s taking a dream one-year anniversary trip or starting a family. 

But planning for newlyweds can look different depending on how financially established you are, says Northwestern Mutual planning excellence lead consultant (and former financial advisor) Bill Nelson.  “A young married couple starting from scratch financially will get to make joint financial decisions from the very beginning and plan for their goals together,” Nelson says. “But couples getting married later in life might already have their own homes, insurance, bank accounts, credit cards, retirement accounts, and individual goals in place.”

If you’re recently engaged, get the money conversation started by talking to a financial advisor about these six things—so your happily ever after can start now.

6 steps to building a financial plan as a couple

1. Create your newlywed financial checklist

Start by going through which documents you’ll need to create or update as newlyweds. You may need to update the beneficiary forms on your retirement and other financial accounts to include your spouse.

“A lot of change needs to happen upon tying the knot, which can be very time intensive and mentally draining,” Nelson says. Having a physical checklist can help you tackle all of the tasks without feeling overwhelmed.

Here are some are of the items you may want to include on your list:

• Changing your name, if applicable
• Changing the beneficiaries on all your accounts (401(k), brokerage, HSA, IRAs, etc.)
• Changing the beneficiary on your life insurance policies
• Updating your W2 and marital status
• Talking to a tax advisor about the impact of marriage on your tax situation, as your filing status will change as soon as you get married. 
• Potentially switching health care plans
• Open new joint accounts
• Changing your automatic bill paying in apps or online portals

2. Decide how you’ll marry your finances

A financial advisor can start reviewing your current spending and saving now to help you understand where you’re both at financially, and so that you can start turning your two budgets into one. 

Nelson suggests merging bank accounts—at least to some extent. “It’s a lot easier to budget and monitor spending and savings behavior when a joint checking account is established,” he explains. “Use a joint account for shared expenses such as the mortgage, groceries, and utilities and automatically transfer most of your paycheck into this account.”

But you may also want to retain individual accounts for personal hobbies and expenses. “This can help already established married couples who want to maintain some of their previous financial independence,” he adds. “The goal is to find the best way to merge and fund goals now that you are planning together.”

A financial advisor can help you figure out what method feels comfortable based on your personal money habits and the roles each of you wants to take on. When you talk to your advisor, in addition to information about your checking or savings accounts, bring the details of other types of accounts you have, such as investment accounts, to discuss whether it makes sense to keep them joint or separate.

3. Plan for your financial goals as a couple

While buying a home or having kids may be years away, Nelson says it’s crucial to start planning for big expenses and life goals now—because waiting can cost you.

“Every dollar delayed toward funding a kid’s education or a new home means less interest or growth it will earn, which means you’ll need to save even more the longer you wait,” he explains. “Put your money to work now—don’t procrastinate because it will only make the budget tighter down the road.”

He adds that most marital problems stem from lack of financial preparation, so figuring out what is truly important to both of you early on—and building a plan to get there—eliminates financial worry and creates transparency because you both know where your money is going.

“Working with an advisor and having a solid plan also holds both spouses accountable, so you aren’t making major purchase decisions without talking to one another first,” he says.

4. Determine how you’ll shrink the debt you now share

If you and your partner are carrying some debt, make a plan so it doesn’t keep you from reaching other financial goals.

“Make [talking about debt] part of a broader financial discussion and treat it as a learning experience,” Nelson says. “Be open and understanding about it. Once it's brought to the surface, you can come up with a gameplan to handle it.”

An advisor can help you think through strategies to help pay down your debt while still saving for the future and paying for the things you want today.  Whether you are liable for your spouse’s debts relies heavily on your state laws and the type of debt you have. When you talk to your financial planner, bring a list of each of your debts so you can present a bigger picture of what you’re trying to pay down as a couple and how to prioritize paying them down.

5. Talk candidly about your personal relationships—with money

While money can feel like a taboo topic, having the money talk will be key to keeping the lines of communication open with your partner. If you’ve been on your own for a while before marriage, Nelson says, you could “develop a mentality of feeling guilty spending someone else’s income or become afraid you’ll lose your financial freedom because your spouse can oversee all your transactions.” Talking about your respective feelings about, fears related to and relationship with money is imperative before you combine finances and start working toward financial goals together.

Nelson suggests discussing the following questions to get on the same page financially and understand your expectations about your lifestyle:

• Are you a spender or a saver? 
• What standard of living do you expect?
• Where do you believe we should spend our money?
• What money decisions do we make together (and on your own)?
• Who will be responsible for managing and tracking finances?

Your advisor may be able to show you how your financial differences can complement each other as strengths. 

6. Have a plan for worst-case scenarios

While no one wants to think about potential disaster when they’re planning a wedding, everyone faces unforeseen challenges at some point. Make sure that you have a plan for creating an emergency fund so that a surprise expense doesn’t catch you off guard. Look at your life insurance policies so that you can cover your family’s current and future expenses in the case that one of you dies unexpectedly. Determine if you need disability coverage to protect your paycheck.

A financial advisor can talk you through each of these areas to figure out what the right amount of coverage is for you. It's also a good idea to start thinking about a will or trust, and to complete health and financial powers of attorney. 

Saying “I do” may be both the most exciting—and most stressful time—of your life. Just remember that the best is yet to come—and the sooner you start a conversation with a financial advisor, the better prepared you and your spouse will be to make your dreams a reality.