Client outcomes

10 essential financial planning tips for newlyweds

April 19, 2024
Woman showing a couple her tablet screen

Key Takeaways:

  • The Institute for Divorce Financial Analysts reveals that money issues are a leading cause of stress and divorce among couples.1
  • Fostering healthy financial communication between couples can be a great way to achieve a successful merging of assets in a marriage.

When two people get married, they often bring diverse financial backgrounds, habits, and goals to the partnership. This convergence of finances can create harmony or discord, depending on how it’s executed. For many couples, the thought of combining finances might seem straightforward—until they are met with the intricate dance of legal, tax, investment, and retirement planning. In this guide we’ll highlight how financial professionals can approach the sometimes-difficult task of combining marital assets.

The impact of financial stress in marriage

Merging finances is more than a simple confluence of numbers—it’s an emotional and strategic endeavor between two people building a life together. It’s no secret that many couples struggle to combine finances, and it can be a source of stress in a marriage. The Institute for Divorce Financial Analysts reveals that money issues are a leading cause of stress and divorce among couples.2 Additionally, its estimated that 1 in 7 Americans ends a romantic relationship because of conflicts over money with their partner.Knowing this, it’s imperative to help your clients get on the same page early and begin to build financial security with one another as they merge accounts, share debts, and budget for their lives together.

Encouraging financial communication

Fostering healthy financial communication between couples can be a great way to achieve a successful merging of assets in a marriage. Encouraging clients to have open and honest conversations about their financial history, current financial situation, and future plans and aspirations can be a great place to start. Couples will probably want to consider the costs of raising children, where to retire, and what lifestyle they want to maintain in these conversations.

Regular financial check-ins can help couples tackle money challenges that come up before they escalate. You can help by mediating conversations about cash flow management, debts, and investment strategies, transforming a potentially uncomfortable conversation into a productive one. Below are key tips that financial professionals can share with their clients to help facilitate a smooth transition into joined financial living:

  1. Prioritize open and honest communication: encourage clients to have detailed discussions about their individual financial situations (including any outstanding debt), goals, and habits before merging their finances. Understanding each other’s perspectives on money is fundamental to creating a harmonious financial future.
  2. Jointly create a budget: guide your clients to collaborate on a comprehensive budget that incorporates both partners’ income, expenses, and savings goals. A joint budget should consider all shared responsibilities and individual needs.
  3. Maintain individual financial autonomy: you can suggest maintaining separate personal accounts for discretionary spending alongside a joint account for household expenses if financial autonomy is important to the couple. Couples may prefer to keep separate accounts as it can foster a sense of independence while still contributing to common financial objectives.
  4. Conduct regular financial reviews: financial circumstances fluctuate; hence, you can advise clients to schedule regular check-ins to review and adjust their budget and financial plan as needed. Continuous engagement with their finances prevents small issues from becoming significant problems.
  5. Build financial security together: a mutual emergency fund is a building block for a strong financial future that can provide security and minimize stress in the face of unforeseen costs. You can encourage clients to establish and contribute to this fund regularly.
  6. Manage debt as a team: impress upon clients the importance of full disclosure regarding individual debt. Work with them to create a combined strategy for paying off debts, prioritizing high-interest loans while considering each partner’s comfort with debt.
  7. Utilize a financial professional for advice: some financial decisions are complex and require professional assistance. Reminding your clients that they can consult you on financial planning disagreements can help ensure informed decision-making and equitable financial planning.
  8. Plan for the future: you can advise clients to think long-term and make joint decisions about retirement planning, investments, and legacy and estate planning. These discussions should align with their shared goals and values.
  9. Update insurance and beneficiaries: after marriage, it’s essential to review and update beneficiaries on life insurance policies, retirement accounts, and other relevant areas. Discuss the importance of having sufficient coverage to protect each other financially.
  10. Understand tax implications: marriage can alter a couple’s tax situation and will most likely need to be reviewed by a professional. Offer to provide guidance on the most advantageous filing status for their particular circumstances and inform them about potential tax benefits and considerations. When necessary, a tax professional can be tapped for additional guidance.

Say “I do” to marital bliss

Married clients stand before an incredible opportunity to build something together that wouldn’t be possible alone. You can play a crucial role in helping couples achieve their dreams. From tax considerations to retirement planning, financial professionals have the tools and knowledge to guide clients towards a mutual payoff that can fortify both their financial health and their marriage. Investing in the fiscal diligence of combined assets now, financial professionals can yield dividends not just in their client’s portfolios, but in the quality and endurance of their clients’ marriages.