Wedding Finance

Wedding season: 3 steps to strengthen your finances as a new couple

Wedding season is in full swing, and with all the beauty and joy it can bring, it’s also important to keep in mind that with marriage comes lots of financial decisions and plans to make. Of course, these aren’t always the first things we think of, but given my career in finance, I can’t help but bring them to the fore.

Whether you are already part of a “we” or creating a new connection, you will need a solid financial foundation for a meaningful and sustainable future. It might not seem romantic at first, but if you’re about to move your relationship forward in a meaningful way, these three steps can help you deepen one of the most important bonds a couple can share: your finance.

Step 1: Get the (money) talking

Intertwining your finances can be a difficult journey. According to the AICPA, more than 70% of married or cohabiting couples have clashed over financial decisions in the past year, with nearly half saying the tension has negatively impacted their intimacy . So you can see that being honest with each other and working to be on the same page is very important.

Working with a finance professional is one way to help guide a productive conversation with your partner. Many employers offer access to these professionals through workplace benefits like financial wellness – check with your organization to see what’s available. For example, financial advisors often advise couples to start by sharing your ideas about what you want your life to look like. Listen to what you have in common and what may differ, then identify top priorities (like paying off debt, saving for a home, or starting a family).

An easy way to start is to write questions on index cards and take turns choosing important topics to cover, such as:

  • How were you brought up to think about money?
  • What do you think of charitable donations? Do you like to financially support specific causes?
  • What do you consider an unnecessary expense? Do you “count the pennies” or “please yourself”?
  • Do you have any financial pet peeves, like impulse spending or meme stocks?
  • If you received a windfall of $1,000 tomorrow, what would you do with it and why?
  • What do you want to accomplish with your money? What does financial success mean to you?
  • What are your ambitions for your career, income and lifestyle?
  • What are some of your top financial concerns over the next five to ten years? Twenty to 25?
  • What does your dream retirement look like?

Keep in mind that “money talk” is not a one-time affair. If you have different approaches to money (like many of us), finding common ground can take time. Try to set up quarterly or monthly “money dates” to stay connected and answer any challenges or questions that arise.

Step 2: Choose your own (financial) adventure

Once you have an overview of each other’s financial compatibility, goals and values, the next step is to get more details about a shared financial life.

When considering how to combine your financial lives, consider your level of trust, the length of your relationship, and any income disparities between the two of you. There are three general approaches that couples often take:

  • “All In”, where you combine and share your accounts and pay all expenses together.
  • “Separate”, in which you maintain your own accounts and delegate certain expenses between you.
  • “Yours, mine and ours”, where you open a joint account for common expenses, but also keep separate accounts for individual expenses.

The more you combine your financial lives, the more you may want to consider creating a joint budget, especially if you live together. List all debts (plus interest rates), income, expected inheritances and assets. From there, you can decide how much you’ll each contribute to shared expenses and goals each month. Then stick to your budget.

It’s important to work toward common goals, so take the time to understand how your financial behaviors fit together and how your choices may affect opportunities, such as access to benefits and credit. For example, how you manage your debts can directly affect your credit score. While financial autonomy is important, fairness and transparency are just as important.

Step 3: Formalize your (financial) partnership

There are several ways to formalize your partnership, financially and legally: marriage, domestic partnership and cohabitation agreements. This decision is particularly important for estate planning, but there are different considerations for each type of commitment.

Marriage provides access to workplace benefits and health care coverage; eligibility for workers’ compensation, disability and spousal retirement benefits; Social Security spousal benefits; more effective estate planning and gifting strategies; and possible tax benefits (check with your tax advisor). A prenup can be prudent if one of you owns a business, has a child, expects an inheritance, or has debts. You can also enter into postnuptial agreements after your marriage.

Domestic partnership rules vary by state, but the law does not recognize domestic partners as “family,” and you may want to work out other legal arrangements. A cohabitation agreement defines who owns what, as well as all financial obligations after a breakup. If you decide on a domestic partnership or cohabitation agreement, check with your employer to see what support may be available – for example, some employers qualify domestic partners for the same coverage as spouses in terms of healthcare. health, financial welfare and other social benefits. .

Whichever route you choose, be sure to build a support team. Look for an accountant to advise you on tax strategies specific to your situation, lawyers to help protect your interests, and a financial advisor (perhaps through the workplace) to help you understand your assets and help you , you and your partner, to achieve your common goals.

modern love

The reality is that money is a daily factor in most relationships. And as your relationship grows, shared conversations and habits about your finances will become more important.

By better understanding each other’s expectations, setting common goals and charting your path as a couple, you can build a sound financial foundation together for the future.

Chief Financial Wellness Officer, Morgan Stanley

Krystal Barker Buissereth, CFA®, is managing director and financial wellness officer for Morgan Stanley at Work. In this role, she is responsible for working with corporate clients and organizations on creating, implementing and managing financial wellness programs that meet the needs of their employees.