7 Financial Checkpoints for Newlyweds
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This week, Austyn Garcia and I discuss seven financial checkpoints for newlyweds and couples approaching the big day. For those who don’t fall into this category, consider sharing this post with someone gearing up for their wedding. I can’t think of a more valuable gift than some good ole’ personal financial advice—truly, the gift that keeps on giving.
And if you would like a little help, call our office at (303) 261-8015 or schedule a free consultation online.
1 | WRITE YOUR GOALS DOWN
[1:48] When purchasing real estate, the adage tells us only three essential considerations: location, location, location. When it comes to amiably sharing finances with another person, those three factors are communication, communication, communication.
Whether consciously or subconsciously, most folks establish financial habits based on environment—largely based on how our parents managed money. If our parents were savers, we’re likely savers. The same is true for your spouse; though, they probably grew up with different financial guidance.
I’d encourage all newlyweds first to define your own financial profile. Are you a spender or saver? How do you determine investment decisions? How do you approach debt? Do you purchase new or used cars? Do you pay bills on the statement date or the due date?
From there, sit down with your spouse, discuss, and outline your shared financial goals. Contrary to popular belief, the “money talk” should be a fun conversation. If you need some inspiration, 84 Financial Questions to Ask Your Partner provides solid conversation-starters.
[5:08] Once you’ve established a foundation, write down your financial goals and display them as a constant reminder of what you’re working toward.
2 | OPEN INDIVIDUAL RETIREMENT ACCOUNTS (IRA)
[6:33] The annual IRA contribution limit for 2021 is $6,000 and will remain unchanged in the new year. For married couples, the limit is $12,000 ($6,000 each). While IRA contributions must come from earned income, it doesn’t have to be your earned income; it can be your spouse’s.
For example, if Spouse A works and Spouse B takes care of the little ones all day, both spouses can still contribute $6,000 into an IRA.
3 | UPDATE YOUR BENEFICIAIRES
[8:25] This point is short and sweet, but I cannot stress enough the importance: update your beneficiaries. That includes bank accounts, investment accounts, insurance policies, etc. I won’t say anything more on this point—make those updates.
4 | UPDATE YOUR ESTATE PLAN
[11:23] If this is your first marriage, you may not have an estate plan; however, if you’re on a second/third/fourth marriage, you may have a will, trust, or power of attorney.
I’ve been in this industry since 2008, and on multiple occasions, I’ve seen assets unintentionally left to an ex-spouse because someone forgot to update their will.
It goes like this: Person A is married to Spouse A. After a divorce, Person A remarries Spouse B without updating their estate plan. Person A passes away. The assets go to Spouse A. Spouse B is mourning and irate.
Call your qualified legal professional to make the appropriate changes.
5 | SHOP LIFE INSURANCE
[12:51] When you’re young and single, you likely have no dependents—nobody else is relying on your income. Thus, life insurance may be unsuitable.
If you’re married, and now a two-income household, perhaps you still don’t need insurance. If one spouse passes, the other can continue earning an income. However, folks often create a lifestyle that isn’t sustainable on one income alone, especially if you start growing your family.
Once others begin to rely on your income for their wellbeing, it’s important to consider life insurance—again, especially when you have children. Read more about life insurance here.
Listener Question of the Day: I recently got married; how much life insurance do I need?
[20:21] We usually save the listener question for the end, but this one fits nicely.
If considering insurance, think of your appropriate coverage range as a field goal. The left up-right represents the minimum value, and the right is the maximum.
The minimum should cover all debts plus one year of income. That gives your family one year to get back on track. The maximum is your human life value (HLV)—your total lifetime earnings potential. That amount will vary depending on who you talk to, but we like to use 12 times your earnings.
Note, every situation is different, so we encourage you to talk to a qualified financial professional about your needs. Our advisors are independent insurance agents, and we would be happy to discuss your options—call our office at (303) 261-8015 or schedule a free consultation here.
6 | UPDATE YOUR DISABILITY INSURANCE BENEFICIARIES
[15:22] Again, we cannot stress the importance of updating all beneficiaries. Disability insurance is a bit different in that its purpose is to protect your income if you cannot work due to disability.
Unlike life insurance, your primary concern isn’t solely your dependents. Usually, disability insurance is more important earlier in a career as younger workers are more likely to lose income to disability than death. However, these policies often pay a death benefit, so again, check those beneficiaries.
7 | CHANGING YOUR LAST NAME
Did you know that about 80% of women change their last name in marriage? Fun fact.
Below I’ve outlined the steps needed to change your last name if you so choose. For a more comprehensive list of newlywed to-dos, download our free Standard of Care Checklist for Newlyweds.
- Obtain copies of your marriage certificate.
- Visit your local Social Security Administration office to change the name on your Social Security card.
- Visit your local DMV to update your driver’s license and vehicle registration.
- Contract your bank and investment advisor to update the name on your accounts. Update your beneficiaries as needed.
- Update insurance documents and mortgage or lease agreements.
- Notify your employing HR department.
- Update subscriptions, bills, your passport, and voter registration card.
Yeah, that last step is a bit of a catch-all.
FINAL THOUGHTS
Congratulations! If you’re reading this, I assume you’re either recently married or tying the knot here soon.
If you would like some help planning your financial journey with your spouse, don’t hesitate to call our office or schedule a free consultation online—a comprehensive financial plan really makes things official.
Disclosures
Securities offered through LPL Financial, Member FINRA/SIPC. Investment advice offered through Denver Wealth Management, Inc., a registered investment advisor. Denver Wealth Management, Inc. is a separate entity from LPL Financial.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.
All investing includes risk including the possible loss of principal. No strategy assures success or protects against loss.
The Roth IRA offers tax deferral on any earnings in the accounts. Withdrawals from the account may be tax free, as long as they are considered qualified. Limitations and restrictions may apply. Withdrawals prior to age 59 ½ or prior to the account being opened for 5 years, whichever is later, may results in a 10% IRS penalty tax. Future tax laws can change at any time and may impact the benefits of Roth IRAs. Their tax treatment may change.
This information is not intended to be a substitute for individualized legal advice. Please consult your legal advisor regarding your specific situation.
This material contains only general descriptions and is not a solicitation to sell any insurance product or security, nor is it intended as any financial or tax advice. Please keep in mind that insurance companies alone determine insurability and some people may be deemed uninsurable because of health reasons, occupation, and lifestyle choices.
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