The Newlywed Financial Planner

His-Hers-Ours Bank Accounts

The basic decision about whether to merge your assets or keep some or all of them separate is an individual one, but experts typically advise establishing a joint account for most regular household expenses (even if either or both of you also choose to keep some dough separate). Why? A joint account helps couples learn to “think of the money as theirs, so they are likelier to make joint decisions,” says Julie Rains, a business and finance expert who blogs about money at WiseBread (wisebread.com). Developing an emphasis on shared goals can help defuse the idea that the higher earner holds more power in the relationship—a dynamic that can get you into marital trouble later on. At the same time, says Bambi Holzer, author of Financial Bliss: A Couple’s Guide to Merging Money Styles and Building a Rich Life Together (Amacom), “you might want to consider keeping separate accounts for paying off personal debt and for personal expenses. This especially makes sense if the two of you have brought very different spending and saving styles into the marriage.”

Saving Up

You want to save for the future, of course, whether that means new furniture six months from now or a new home next year. But hold up a sec: Just as you probably shouldn’t buy your wedding shoes before you settle on a dress, there are steps to savvy saving, too. First is to whittle down any debt (don’t have any? Very cool.). Start with your highest-rate cards and set aside a monthly payment (as much as you can, preferably more than the minimum). Also, “set up a joint account, separate from all other accounts, and seed it with cash gifts from your wedding,” says Holzer. Once you pay off your debt, you should also deposit the monthly amount you were paying toward it—this is called paying yourself. The rule of thumb is to have six months’ worth of living expenses stashed somewhere safe but liquid, like a money market fund. Just remember that this growing pile of cash is strictly for emergencies: a job loss, a medical emergency or for unexpected but essential repairs to your home or car. Finally comes investing, which you should only do after you are debt-free, have a cushion of cash solidly in place and have consulted a financial planner for advice. When you feel ready, Rain says, consider opening a discount online brokerage account and starting with no-load mutual funds (shares sold without a commission or sales charge). “That’ll give you, as new investors, experience in handling market ups and downs,” she says.

Rent or Own?

No matter your living situation before you got married, you now may have the totally understandable itch to make a brand-new nest with your brand-new spouse. But should you rent or buy a home? If the two of you are on the younger side, still unsettled in your careers and don’t plan to have children in the foreseeable future, it may make more sense to rent for the time being. “That’ll give you flexibility for future job positions that may require relocation,” says Rains, not to mention saving you the headaches of home ownership and maintenance. However, if you’re in a good financial position (read: You have ample savings to put toward a down payment, and good-to-excellent credit necessary to get a decent mortgage), then you should go ahead and start house hunting. One thing to keep in mind: If you plan to have children sooner rather than later, you should only consider buying in family-friendly communities with lots of resources for children and high-quality school districts. “You don’t want to waste time and money trying to sell a starter home in just a few years in order to move to a more family-oriented neighborhood,” advises Holzer.

Prepping for Parenthood

You’ve heard from everyone you know that kids are expensive—and they are: Over the life of a child, you can easily spend upward of $150,000 or more, depending on your income, says Holzer. (See “And Baby Makes Three” on Holzer’s website, financial-bliss.com.) Obviously, you don’t have to sock away that big a bundle before you have a baby, but if you’re thinking about starting a family in the next one to two years, then it’s a good idea to plump up your savings cushion, in case either of you wants to take some time off after becoming a parent. Even if you think you won’t do so, you should give yourself the option. You’ll also want to prepare for any unexpected new baby expenses, like child care, for example.

Retirement Readiness

In the best-case scenario, your company has a 401(k) or 403(b) plan, you’re putting in the maximum percentage allowed and your employer is matching those contributions. If, however, you can’t manage the highest percentage allowed, but your employer does match at a certain level (say, 5 percent) at least try to do that. If not, you’re turning away free money. If you don’t have a retirement option at your job, open up an individual Roth IRA through an investment company like T. Rowe Price, Fidelity or Vanguard. The paperwork is easy. One option for couples in their 20s and 30s is to choose funds targeted to a proposed retirement age; the mix of investments automatically changes as you approach that time. Other retirement tips: If you change jobs, roll your 401(k) into an account at your new job or into an individual IRA at an investment company. You can also choose to leave it where it is. If you have a 401(k) when you get married, make your spouse the beneficiary. Finally, you should each maintain your own accounts; don’t leave it up to one spouse to fund your golden years. The more (savings), the merrier!

Dos and Don’ts

In the great big world of financial priorities, there are some things that are high on the list—and others that can wait for later.

DO...double-check health insurance coverage to see if it makes sense for him to switch to your plan or vice versa—or to remain on separate plans. It’ll take some number-crunching, but with health insurance costs skyrocketing, it pays to figure out what’s most advantageous. Caveat: If one of you has a pre-existing condition that is already covered by your insurance, it may not necessarily be wise to change. Ditto, if you plan to have a baby soon; make sure you’re on the plan that has the best pregnancy and birth coverage.
DON’T...spring for life insurance right now, unless you already have children. Life insurance is only necessary if you have someone who depends on your income, such as a child or a nonworking spouse.
DO...work out a mutually acceptable way to handle spending. Some couples find that if they agree to discuss any expenditures over a certain amount, say $100 or $200, they can usually avoid an argument when someone comes home with a new mountain bike. “It’s helpful if one spouse doesn’t micromanage the other person’s spending, but each spouse needs to have some limits,” says Rains.
DON’T...plan to save for your potential (or actual) children’s college savings at the expense of your own retirement. There are always ways available to pay for college (scholarships, loans, affordable state universities and community colleges, etc.). Retirement, however, is a different story—and you won’t want to come up short for that.