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Editorial

Financial Planning for Couples


04/01/2005 - There is a practical side to romance that is often overlooked. Not to denude the passion flower but I'd like to take just a few lines here to give you something to clip out and save for later. At some point in the life of every couple – married or unmarried – the subject of

money will come up. Here are a few salient points to keep in mind when that crass subject eventually rears its ugly head.

First - Spend as much time talking about your finances as you do about the wedding flowers. In the frenzy of planning the wedding, money is often overlooked. What about money after the nuptials? How much do you have, how much do I have and how are we going to handle what we both have?

To get a start on this, sit down and individually write down your budget before the marriage. How much do you have coming in, how much do you have going out and is there anything left at the end of the month? Do this separately then decide how you're going to combine those two columns into one column after the wedding. Resolve any differences and if you don't resolve them at least start talking about them. Make sure you include a savings plan.

After you've worked out the budget, individually write down your five financial goals for the marriage. Then, compare those as well and work out any differences.

Decide if you're going to have one checking account or three. That is, will you have just one account that all the household money goes into and comes out of or will you have individual accounts for whatever individual expenses you may have negotiated and then a combined, household account for joint expenses? If you have separate accounts (that is, one checking account primarily used by each partner), make sure that the other partner is a signer on the account so that those funds can be accessed in an emergency.

Decide who's going to handle the money and pay the bills. If you're not the bill payer, still pay attention. Don't just expect the one partner to pay the bills and then decide not to think about it for the rest of the marriage. You may end up being surprised. Take a look at the bills each month and make sure you're not getting behind on them. If you are, discuss what to do about it. Soon.

Many times, combining your lives means combining existing debts. How will you handle existing debt? Are you each responsible for your own? Or, will that existing debt be paid out of that joint checking account?

Review how your assets are titled. You might each be bringing a car into the marriage. You may want to keep those separately titled but you also may want to consider re-titling them so in case the unexpected happens (one of you dies), your spouse is entitled to the vehicle.

Review your insurance coverage through your employers including health, life and disability insurance. Not all insurance plans are created equal. Sit down and work up a budget sheet for each type of insurance you may have. How much does it cost (if anything), what are the benefits, what are the deductibles, etc? One of the types of coverage that is often overlooked is disability insurance. This is coverage that pays you if you're medically unable to work. If you don't have this, I'd recommend going out and getting a policy from your local agent. It's generally inexpensive. Don't just expect your spouse to work harder if he or she suddenly has to carry all the water.

Be sure you take advantage of employer sponsored savings accounts like 401(k)'s. The employer's match in a 401(k) is basically free money and the earnings in a 401(k) plan accumulate tax free. Also, leave the money in the 401(k) – some plans allow you to borrow against them, say, for important things like that new boat you've always wanted. Don't do that. The money is for retirement (which you will eventually want to do) so leave in there for that purpose.

Prepare a will. This is a legal document that says who gets what in case you die. You'll need to consult an attorney and although there is an expense involved (ask how much up front) it's important to do. If you don't make out a will, each state already has one for you. Dying without a will is called "intestate" and you may not care for the state's plans for your assets. So, take the time to make your wishes known.

Make sure you check your credit report regularly. There's a new federal law that requires the three major credit reporting agencies to provide each consumer their credit report free once a year. Go to www.annualcreditreport.com and follow the instructions. My suggestion is to at least look at the report at one agency every four months.

Finally, when in doubt - communicate. I've given you a list of things to think about – I haven't told you how to decide. That's for you to work out and negotiate. But, please do it. Disagreements about money are one of the fastest, easiest and most frequent ways to wreck a marriage. Use the silver bullet to deflect that from infecting your relationship – move your lips and discuss it.

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