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Once all the decision making with regards to their big day has been put to rest, couples taking the plunge often must make financial decisions before or shortly after walking down the aisle. After deciding on everything from the guest list to music to menus, couples may not be in the mood to do any more planning once everything has been put in place for their wedding day.
But the quicker financial planning is done, the better — and before walking down the aisle if at all possible.
Perhaps the best place for you to start when discussing finances is your respective thoughts toward money. Discussing your resources and your financial goals is imperative to establishing a relationship where each of you becomes more responsible or more flexible with your finances. It's also a good thing to discuss if you'd like to combine bank accounts, or if you'd just like to continue on with your own personal accounts. Joint accounts can give you both easy access to funds, while also increasing the likelihood that you'll avoid fees, as your joint account will boast a higher balance and earn more interest on the combined savings.
Keeping your own personal accounts can often be beneficial at tax time too — along with continuing what has become a comfort level with respect to your own personal finances. By keeping your own accounts, you're also maintaining some level of independence as well.
For those couples who have already walked down the aisle, it is important to consider the tax ramifications of marriage. While the standard deduction for married couples filing jointly in 2004 ($9,700) was equal to the combined deductions of two people filing separately, filing jointly and itemizing your tax returns could be a great option for newlyweds, as two people are likely to have more deductions than just one person filing alone. Keep track of any deductible expenses, including anything from charitable contributions to state and local taxes.
And if you're among the legions of newlyweds who have purchased a first home together shortly after getting married, you can also deduct certain mortgage expenses and your mortgage interest.
It might not be a bad idea, either, to adjust your W-4 form at work to withhold more from your paycheck each week. By increasing the amount of money withheld from your paycheck, you can avoid the pitfall of a big tax bill come April 15.
Health insurance is also a decision most newlyweds have to make once they've officially tied the knot. Since most people are covered by employer-sponsored plans, combining policies can often be a less expensive way to go without sacrificing any health benefits. Typically, one policy that adds a spouse as a dependent is less expensive than two separate policies with no dependents. For instance, those who are self-employed and paying for their own policy will most assuredly find it cheaper to join their spouse's employer-sponsored plan.
While health insurance is a chief concern, newlyweds also need to consider whether or not life insurance is an avenue they want to travel down. Particularly for newlyweds who have recently purchased a house together, life insurance could be a necessity to ensure that one spouse can still afford to make the mortgage payments should the other pass away. If you already have children, life insurance is a necessity. Also, if either spouse has any pre-existing policies, they should be updated as soon as possible after the wedding to list the spouse as a beneficiary.
Examining the things you own is also something couples need to consider, particularly if you already own a home. If you have expensive jewelry, for instance, increase your homeowner's insurance to add extra protection. Also, with respect to auto insurance, oftentimes combining policies is the most cost-effective way to go. Typically, insurance companies lower premiums with each car added onto the policy. Many auto insurance companies also view married couples as safer drivers, which also leads to lower premiums.
Finally, the last and perhaps most difficult financial decision to make is whether or not to get a prenuptial agreement. For many couples, pre-nups are irrelevant. But for couples who already have substantial assets or children from a previous marriage, a prenup can be the best way to protect their children and money should they pass away prematurely or end up divorced.
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