All Things Financial Planning Blog


3 Comments

We’re Married. Now What?


With six wedding ceremonies to attend this year, 2012 has been the year of marriage celebrations for me. It’s an exciting time in many of my friend’s lives and I couldn’t be happier for them! However, as the months after the ceremony roll on, questions have been popping up as to the best way to merge finances, what debt to pay down first, what steps to take to change names, and what else is out there that they haven’t even considered. In hopes of assisting my friends along with the many other newlywed couples out there, below are some items to consider in the days and weeks after your marriage:

Name Change: Post wedding, make sure you obtain at least 3 copies of your official marriage certificate from the county clerk, which is where your name change will be indicated. You’ll begin the name change process by first obtaining a new social security card (visit http://www.socialsecurity.gov for more information). From there, visit the DMV to update your driver’s license and then move on to your passport, employer, voter registration, bills, bank accounts, etc. It may be helpful to make a list of all the accounts you’ll need to update.

Taxes: You and your spouse may begin to file your taxes as “Married Filing Jointly” in the year that you are married. Be sure to check in with your accountant as to if that is the best route for you two and update your withholding elections through your Human Resources department if appropriate.

Money Mergers: Hopefully you and your spouse had more than just one conversation about money pre-nuptials. Some things to consider in the days ahead are whether or not to open a joint account. If you decide to go this route, also discuss if you will maintain separate accounts or if everything going forward will be deposited into your joint account. Work out a detailed spending and savings plan and ensure the two of you are on the same page with how your money is being managed and spent.

Assets & Liabilities: Create a list of all of your accounts, including Roth IRAs, 401(k)s, checking, savings, and any other personal cash or investment accounts. Decide if any accounts (aside from retirement) should be consolidated and if you’d like to add each other to titles of cars, property, or any other assets. In addition, review your investments and take some time to adjust your allocations so that it is appropriate based on your combined goals. Also create a list of any outstanding debts such as: credit cards, student loans, mortgages, and car loans. Prioritize your debt re-payment plan by focusing on those balances with the highest interest rates first – likely your credit cards.

Insurance Needs: For items like car and health insurance, evaluate each of your plans and pick the better of the two. Your car insurance should provide the best coverage for the most reasonable price. For health insurance, ensure that your current doctors are available under your spouse’s plan or that you’re okay with making a change if necessary. With life insurance, first determine the amount of coverage needed by considering outstanding debt and the loss of household income that would occur should something happen to either you or your spouse. For young couples just starting out, look into term coverage, which should provide coverage at the most reasonable rate.

Beneficiary Update: An item that is commonly overlooked by newlyweds is the updating of beneficiary information. If you and your spouse determine that you’d like to name each other as beneficiaries, be sure to contact your HR department at work and any companies that hold a life insurance policy or retirement account for you to make necessary updates.

Estate Planning: In the months ahead, consider establishing Durable Power of Attorneys for finances and health care and creating a Will that addresses your combined assets and wishes.

The list above won’t address all of your financial concerns as newlyweds, but by taking the time to go through each item together and consulting your accountant, financial planner, or attorney, you will start your new marriage on a financially healthy road to success.

Mary Beth Storjohann, CFP®, CDFA
Senior Financial Planner
HoyleCohen
San Diego, CA


Leave a comment

Life After the Ceremony


Earlier this year I had the opportunity to introduce you to a couple that had just gotten engaged. I thought it might be a good idea to look in on Timmy and Lailah to see how things were coming along. I recently had the opportunity to spend some time talking to Timmy over lunch at the California Pizza kitchen. Subsequently, I chatted with Lailah over the phone. 

The ceremony is now just 3 months away and most of their attention has been focused on the details of the wedding day. First there’s the good news. They made a budget and within reason have been able to stick to it. This is a particularly good sign because one of Timmy’s major desires is to “Not go broke paying for a wedding!” As they have worked their way through the process, they have negotiated with the various vendors and managed to get some nice discounts. With the economy being slow, vendors are more likely to make deals now than in past years. The couple is getting a lot of help from family and friends. Lailah is getting monetary assistance from her step dad and her dad. This is a huge plus. 

Now when the conversation turned to the future beyond the next few months, the picture was a little less crisp. They both admitted that they had not spent as much time as they should discussing how their life together will change after they exchange their vows. Here are a few key take aways that they are going to work on that might be helpful to you or someone you know. (Some of these make sense even if you’ve been married for awhile.)

  • Defined Roles – Questions like “Who will be primarily responsible for paying the bills?” need to be discussed beforehand. Who will take the lead on making financial decisions like purchase of life insurance, beneficiary changes and the like?
  • Household Accounts – Not only does a decision need to be made regarding who will be primarily responsible for paying household bills, but how much will each spouse contribute. Does each person get assigned certain bills? Is a certain amount contributed to a shared account from which common expenses are paid?
  • Children – This is perhaps the most significant “financial” decision that a couple can make. We had a new intern start here in the office. He made an off-hand comment about the number of children he might like to have when he gets married. He very quickly backed off of that number once he heard the current going rates for child care in our area. The act of having children should not be taken lightly and absolutely will have a tremendous impact on most family finances.
  • Communicate – Don’t make assumptions about how your spouse thinks about certain things. Take the time to ask. Find some quiet time to sit down and talk. Life can get crazy and when you’re planning a wedding it can be uber-crazy. Just be sure that you keep the lines of communication open. That way, life after the ceremony can be just as sweet as that special day.

leeBaker

Lee Baker, CFP®
President
Apex Financial Services
Tucker, GA


3 Comments

You’re Engaged. Now What?


So he got down on one knee and popped the question. You told him “Yes!” What happens next? Perhaps saying yes was the easy part. After you’ve called your family and friends to announce the good news the real work sets in. Let’s take a look at some questions and guidance that we might give to an almost real life couple. I’ll call them Timmy and Lailah.

Timmy and Lailah, like a lot of couples, met, dated for awhile and eventually fell in love. Timmy got up his courage, saved up some cash and asked Lailah for her hand in marriage. Well now the ring is on her finger and properly sized. They’ve had a nice dinner and then “Wham!” Reality hits. Where do we get hitched? Who’s going to be there when we tie the knot? Where are we going to land after we jump the broom? Who do we get to cater? Who’s going to be the flower girl? And let us not forget what color cummerbund is Timmy going to wear? All of these things are important and many involve monetary decisions but they are temporary. After the wedding they are old news. Let’s peer into our crystal ball of the future and look at some issues.

Who will pay the bills after Timmy carries Lailah across the threshold? I would advise Timmy and Lailah to sit down and have a discussion about this. They should come to an agreement of how household bills will be paid. There are many different ways that couples have handled this topic. Many couples pay all household expenses out of a joint account. In most cases, each spouse has a separate account that they can use at their discretion. Perhaps the personal accounts can be used for mad money, golf expenditures or whatever makes them happy. In some instances, couples have simply divided the responsibility for certain bills. Maybe Timmy will take care of the mortgage and utilities while Lailah covers the car payment, groceries and the like. There is no one size fits all answer but the discussion should happen sooner rather than later.

If it hasn’t happened already, Timmy and Lailah should also have a heart to heart discussion about their past. No, I don’t mean past lovers. I’m talking about their financial past. Does Timmy have a sparkling credit history? Does Lailah have a ton of student loan debt to bring along for the ride? Everything needs to be put on the table. There may be some things that affect the decision of how to file taxes going forward. As an example, if one spouse has tax related issues following them around it might be best to keep the finances relatively separate. This way if there is some sort of levy or garnishment any potential fallout can be mitigated. 

None of this stuff sounds terribly romantic but it is incredibly important. Nothing can put a damper on romance down the road like money problems. Having an open and frank discussion now can go a long way to keeping the fires of romance burning later. 

Best of luck to you Timmy and Lailah! I’m rooting for you.

leeBaker

Lee Baker, CFP®
President
Apex Financial Services
Tucker, GA


13 Comments

Planning Your Wedding, Avoid the Financial Hangover


We are heading into wedding season and many people are already neck deep in the wedding planning process. Then again, some are just beginning to plan a wedding for this time next year. One thing I have noticed is that more and more brides and grooms are choosing to pay for their own weddings. People are getting married later, and many times the groom and bride are already established in their own careers. They can afford to pay for the wedding themselves without the help of their parents. As a result, the bride and groom have more control over the decision making process and cost.

There is a lot of information out there across the web and in bridal magazines. But I think it is still worthwhile going over some basic principles:

  • Set a total budget number and work hard to stick to it. There is a wide spectrum of estimates as to what the average wedding costs ($9K, $15K, even $27K). I suggest you ignore them. What it comes down to is finding a number you’re comfortable with. Every couple has their limit, and despite influences (magazines, parents, etc.) saying your wedding must include this or that, you still have ultimate control over the costs.
  • Make a list of your top four or five priorities. Share and discuss them with your future spouse. This process will help you set priorities within your budget. For example, the food might be a high priority to the bride while the band or DJ might be more important to the groom, and so on.
  • Destination weddings are more and more popular and can be less costly.
  • Limit the number of people with input to the decision making process. Two or three is probably an optimal number for major decisions. The smaller stuff, one or two people. When too many people get involved, especially on the smaller decisions, you’re asking for conflict and added stress and most likely added expense.
  • Remember, this is YOUR wedding. In the end, the only two people who really matter are you and your future spouse.
  • Consider using a wedding planner for a larger event (150+ guests). In addition to management skills, a planner can secure discounts on products and services.
  • Monitor your spending on a month-by-month basis to ensure you are staying within your budget. Sometimes, during the main planning/purchasing phase, you may need to monitor spending on a weekly basis. Develop a system using a spreadsheet or budgeting software package.
  • Communicate, communicate, communicate with your future spouse.

The above suggestions may seem obvious, but in practice they can be quite difficult to achieve. When you dive into the process it is easy to lose perspective and find your wedding going overboard and over budget. It might be necessary to come up with an evaluation process, something you can quickly go through in your mind when making both large and small decisions. There is the simple question “Is it worth the cost?” But that is not always an easy question to answer. Talk it over before making any rash decisions. Another question might be “While this might give me great pleasure, does it really add any meaning to the occasion?” and the reverse “While this might be meaningful to me, does it add any joy to the event?”

As for judging the allocation of expenses within the total budget below are a set of guidelines offered by the CCCS (Consumer Credit Counseling Services).

Ceremony (location, fees, licenses) 3%
Receptions (location, food, cake, decorations) 48%
Attire (dress, tuxedo) 10%
Wedding Rings 3%
Flowers (bouquets, decorations) 8%
Music (ceremony, receptions) 8%
Photography (photographer video, prints) 12%
Transportation (shuttles, parking) 2%
Stationary (invitations, guest book, thank you notes) 3%
Gifts (for bridesmaids and groomsmen) 3%
Total 100%

Again, remember that this is YOUR day. And when all is said and done it’s not the “things” that matter, it’s the love you and your future spouse share. All your planning and hard work will pay off in the end, giving you the wedding you always wanted but not leaving you with a pile of bills. After all, you don’t want to have a glorious wedding day only to find yourself starting your marriage with a financial hangover.

taraScottinoTara Scottino, CFP®
Senior Vice President
Carter Advisory Services
Dallas, TX