March 30th, 2017
When you’re planning a wedding, between the dresses and the invitations and the catering and the flowers, often the last thing on your mind is tax planning. Who wants to consider something so dry, when you’re busy daydreaming about your sun-soaked beach honeymoon? But getting your financial ducks in a row may be crucial to your future financial (and marital) success. Plan now and you’ll be able to maximize your worth, avoid costly debt, and take advantage of all of the tax breaks available to you; not to mention avoiding getting tripped up by fighting about that romance killer - money.
First things first; if you haven’t done this before the wedding, then one of the first items on your new marital to-do list is to sit down and have an honest conversation about money. You need to know where you stand to understand how you can move forward. Each of you should order a copy of your credit report and review them together. Brace yourself here; couples often fudge their financial histories a little bit when they get together, and it’s not unusual to suddenly discover that your new betrothed is saddled with a few grand worth of credit card debt or unpaid student loans. The most important thing here is to get all the cards on the table and devise a plan for tackling debt and improving any sagging credit scores.
Once you have an idea of your credit picture, develop a picture of your financial worth as a couple. Combine your salaries, investments, savings, and property, and get an idea of your spending power. With your debts plus your income in mind, develop a budget that includes all of your household expenses, debt repayments, and savings. If you have financial goals that you hope to meet together, like buying a house or saving for retirement, make sure your budget reflects these goals. Decide who the most financially savvy one is and give that person the task of enforcing the budget.
Now, you have to tackle the paperwork to establish yourselves legally as a married couple. If your name has changed, you will need to apply for a new social security card and driver’s license. All of your insurance policies, 401Ks, and IRAs should be updated to reflect your new name, and your new status. Consider changing your beneficiary designations so that your new spouse will inherit these things in the event of your death. Also make sure that you are adequately insured. Marriage often brings with it things like large mortgages; make sure the surviving spouse is financially covered should something happen to one of you.
You will need to change your tax information with your employer to reflect your new married status. Thanks to federal laws that give a variety of tax breaks to married couples, filing joint tax returns almost always adds up to big savings. One size does not fit all, however, and sometimes married couples do better filing separately. You should tackle this question well in advance of that April 15 deadline. Contact the IRS for their information booklet for newly married couples and visit a financial planner to get professional advice. You are not under any legal obligation to choose one filing method over another, but picking the wrong one can make your lose big in the financial world.
When you’re a newlywed, tackling these financial matters can be tedious, dull, and sometimes downright uncomfortable. In the long run, though, setting yourselves up the right way financially means setting yourselves up for long term success.