Three Steps to a Solid Financial Future for Nearlyweds

Whether you are a nearlywed or a newlywed, building a solid financial future will be an important step towards building a marriage that will last a lifetime. In my thirty-plus years of working with families on their personal finances, when a marriage fails, money is more often than not a contributor. By setting good habits now, you’ll eliminate one of the root causes of marriage failures. Here are three steps you should follow:
1.      Show & Tell. Start by laying all of your cards out on the table. Each of you should make a list of your financial assets such as bank account statements, 401k statements, brokerage account statements and real estate, if any. Then do the same thing with all of your liabilities including student loan statements, car loans and credit card statements. More often than not, one of you will be surprised by what the other has (or owes!). 
2.      Discuss goals. Talk about your financial goals for one, five and ten years. My suggestion is for each of you to do this exercise separately (avoiding, initially, the influence of the other), then come together and share your results. Often you’ll find you have quite different perspectives and this will allow you to gain insight into what’s important to your partner. Together, you should now develop a common set of one, five and ten year goals along with a basic ‘action plan’ for achieving them. For example, if one goal is to pay off your student loans over the next ten years decide how much you’ll pay each month and set that plan in motion. One ‘non-negotiable’ goal I’d ask you to consider is setting up an automatic investment program specifically for retirement based on a minimum of ten percent of your combined gross pay. This can be done through your employer’s 401k plan or by using a traditional or Roth IRA. Trust me when I tell you, you’ll thank me when you retire!
3.      Pick a CFO. Decide which of you is going to be the chief financial officer for the family. For most couples, one person tends to have a natural interest in taking charge of the family finances while the other is happy to ‘not be involved’. In my experience, this strategy is a formula for strife in the marriage somewhere down the road. First, it’s great if you decide to share the responsibility, just make sure you clearly define who is responsible for what. Maybe one of you will balance the checkbook while the other pays the bills. If one person is going to be in charge, it’s essential that you set up and stick to a communication system where the person in charge sits down with the other to review the family finances as well as the progress towards your predetermined goals.   My recommendation is that this be done monthly. For example, agree that the first Monday of every month, you’ll get a nice bottle of wine and spend an hour reviewing the ‘state of the family finances’. There, that wasn’t so bad, was it?
Parents, do you want to help?
I’m often asked by parents of newlyweds about the best way to help their child and new in-law financially. Some of the more obvious ways would be to assist with student loans or help with the down payment for buying their first home. Less obvious would be to make certain they have appropriate health insurance, disability insurance, life insurance as well as basic estate documents including a durable power of attorney and advanced healthcare directive and a will. They’ll probably get health insurance from their employer but may not get employer provided disability income insurance. Think about it, if your adult child were to become disabled and couldn’t work, where will the financial responsibility for financially caring for that child fall? In a lot of cases, you’ll step up and that can be very expensive and impact your own retirement planning. Life insurance becomes important once they decide to start a family. If your son-in-law died leaving your daughter pregnant, who’s going to come to the financial rescue? Yep, probably you. Again, financially raising a second family can destroy your retirement plans. So in many cases, we’ll have the parents pay for life insurance or disability insurance for the child or in-law as a means of protecting both the young couple and the parents. 
Healthcare directives are important for a number of reasons but one important one is that it allows you to appoint someone as your ‘agent’ for receiving information from the doctors when you’re in the hospital. Without a healthcare directive, medical professionals may not release information, even to a spouse. The good news is that you can download this document for free. Just be sure to have it properly witnessed. For a free download visit the Resource Center at; click on ‘Links’; then click on “Living Will- State by State”. You’ll need to hire an experienced attorney to draw a durable power of attorney and will. The power of attorney allows you to appoint an ‘agent’ who can act on your behalf if you are unable to do so. The will allows for the efficient transfer of assets to whom you designate at death. Dying without a will can be very time consuming and expensive for heirs.
Parents, be sure you are setting a good example by also following this advice in this article! While this is not the romantic side of marriage for newlyweds, it may be one of the most important steps they can take to create a wonderful, loving, lasting marriage.