Marriage: Entering a New Investment Life
There are many issues couples need to think about before tying the knot -- wedding preparations, family, and, of course, money. Addressing personal finance and investment issues before the big day will help improve your odds of being together years later. Having an open dialogue about money will give each of you a chance to discuss your personal styles, preferences, and goals. This is an important step to setting the stage so you both may have money peace of mind. Here are some financial issues to consider when embarking on a matrimonial journey.
Discuss financial styles – Before you get married, start off on the right foot by having an honest discussion about financial habits and objectives. Are you a saver, but your prospective spouse lives paycheck to paycheck? Do you prefer investing aggressively, but your fiancée’s portfolio is conservative? What is each of your short- and long-term financial goals?
Join the different pieces -- Consider each spouse's investment portfolio as part of a whole. For instance, if both you and your mate contribute to 401(k) plans and IRAs, see how your investment choices match up. Depending on your goals for retirement, one or both of you might want to invest more aggressively. Or you might find that your combined portfolio is more exposed to risk than the two of you can tolerate. Either way, you can rebalance your asset allocation by shifting money from one asset class (stocks, bonds and money market instruments) to another or by adding new money to the under- represented asset class.
Review documents -- Along with other legal documents, remember to update your beneficiaries on life insurance policies, IRAs, employer-sponsored retirement plans and pensions. Also, be sure to either create or modify your wills.
Determine your tax status -- Once married, you'll need to decide whether it's best to file your taxes jointly or separately. Usually, the "married filing jointly" status results in a lower tax liability, but in some instances -- depending on deductions and income earned -- "married filing separately" may be more advantageous
Meet with a professional -- Make a date with a financial planner to discuss your financial goals, such as buying a home or investing for retirement. Then, after making sure that all of your bases are covered, relax and enjoy the beginning of your life together!