It’s almost peak wedding season, and 2022 promises to be one of the busiest wedding years in recent history.  While the couple’s gift registry may be full of wonderful ideas from honeymoon horse rides on the beach to couple’s massages, I wonder if there is a more meaningful gift that I could give a couple starting out. Many young people are struggling with student loan debt, a turbulent economy, and the competing need to save simultaneously for retirement, a house, and the possibility of future children. In the 12^th annual “Parents, Kids and Money Survey” (by T. Rowe Price December 2020) 41% of parents admitted to having difficulty talking to their children about financial topics. Since many people are likely going to be starting their marriages with limited knowledge of personal finance, here are some tips to start a marriage off on a solid note financially.

1. Discuss your financial situation together. If you haven’t done so already, now is the time to start a financial conversation.  Be honest with each other.  Make a list of your fixed expenses (rent, food, utilities, transportation) and your discretionary expenses (dining out, entertainment, clothing, gifts).  Does your income cover all your expenses or is there a shortfall each month?  This is the time to make tough choices on what you can defer or cut back if needed. Other options to make ends meet include getting a second job or doing gig work to raise your income.

2. Ownership of Accounts. Do you plan to maintain separate checking and savings accounts, or will you own these jointly?  What about your investment assets? You might decide to have joint checking accounts to pay monthly utilities, groceries, and rent/mortgage from, but retain your own savings accounts. These are important decisions that have long-term consequences so give this some thought before proceeding. If one of you brings significant assets into the marriage a pre-nuptial agreement may be in order.

3. Review your life insurance needs. Do you have life insurance?  If you do, then make sure to update your beneficiaries and review coverage amounts.  If not, now may be the time to consider purchasing it to protect your spouse in the event of your untimely death.  Term insurance for a period of 20-30 years is usually very affordable for young couples.  In addition to covering the expenses of a funeral and burial, life insurance can be used to pay off debts and provide a nest egg for the surviving spouse.

4. Talk about your financial goals. Setting realistic short- and long-term goals together will help you stay accountable to each other and allow you to celebrate when you reach these big milestones.  Saving for a down payment on a house is a typical goal that can be cut into manageable pieces.  For example, if you are trying to save $30,000 over the next 2 years, that is $1250 per month.  Is that achievable given your budget? It is easier to stick to a plan when you establish your goals in writing.

5. Save for retirement. Retirement may feel like a long way away but the best time to start saving is when you are young and have the power of compounding your returns over many years.  Review with your spouse any workplace retirement plans that you are eligible for (such as 401(k) or 403(b)) and take advantage of any employer matches.  If you are self-employed there are several great options that you can implement on your own such as SEP-IRA’s or Individual 401k’s.  Even a non-working spouse can take advantage of the “spousal IRA” to make annual contributions.

6. Be ruthless about eliminating debt. It is common for one spouse to enter a marriage with more debt than the other. Write down all debts that each of you have including credit cards, car loans, student loans, and family loans with the balances and interest How are you going to pay this off? This is a great opportunity to get on the same page financially with your spouse and discuss your priorities.  Understanding each other’s debt situation is not only healthy for you financially, but also healthy for your marriage.

7. Save for a rainy day. If you don’t already have a rainy-day fund or emergency account, move this to the top of your to-do list.  This is a fund that should be set aside for the unexpected – such as the disability of a spouse, loss of a job, car, or major home repairs.  We recommend a minimum of 3-6 months of fixed expenses to be set aside in savings.

8. Consider getting help. Overwhelmed by all this information?  Hiring a CERTIFIED FINANCIAL PLANNER™ can be a great way to help a couple with goal setting and establishing a budget.  As an impartial third party, they can provide a neutral presence to facilitate discussion, resolve problems and act as a resource for questions that arise.