Saying "I Do"

When two people decide to tie the knot, there are a number of very important financial issues that should be recognized, discussed, and resolved. Do you know what those issues are?

Getting married is a wonderful and exciting time. Saying "I Do" is the easy part for most of us, but then comes the reality of planning the wedding and making a life together.

Before you spend all of your (or your parent's) savings creating that magical day, you and your partner should discuss how you each manage your money and spell out just what your financial expectations of each other are.

Finances can often be an area of significant tension, unless each of you has an understanding of the other's philosophy and an agreement about how you're going to address your family financial needs.

As you blend your lives together, you will realize that most decisions you make affect you both as well as your family. It's time to start taking the appropriate steps to join your lives together in a way that will avoid unnecessary misunderstandings later.

Here are the financial issues you should be discussing and acting on as a couple:

  • What are your financial goals? Are you the type to live in the moment and go on every exotic vacation or do you want to limit your spending so you can retire early? Is it important for you to own a home of your own as soon as possible, or are you the bohemian type who goes wherever life takes you.
  • Are you going to have joint bank and investment accounts? What does it mean if you live in a community property state? What are the pros and cons of combining your finances?
  • What insurance and retirement plans do you currently have? Review all documents that feature a beneficiary, such as life insurance or your company retirement plan. This is especially important if either of you has been married before.
  • What employer-sponsored plans do you have? Review your employer benefits and health plans and determine whether makes sense to add your spouse to the plan. In some cases it's more cost effective to stay on separate plans. (See the Employee Benefits section for more details on this topic.)
  • What are your insurance needs? Review the life insurance needs. You will likely benefit from lower rates if you're married. And, remember, men with wives live longer than men who are single!
  • What's the best approach to auto insurance? Review your auto insurance policies. Most companies offer lower rates to married people—unless, of course, one of you had been raking up the tickets!

Commonly asked questions

  • Is either of you bringing debt into the marriage? If yes, are you paying it off together? Do you have a specific, realistic plan for eliminating that debt?
  • What about credit cards? How many do you each have? Are you paying them off every month? Women in particular should keep their own credit cards so they can continue to build up their credit file should they ever need to stand on their own.

Are you familiar with each other's tax returns? Review your tax returns together. Depending on your specific circumstances, it may be beneficial to file separate returns even though you're married.

Commonly asked questions

  • Do you have a will or trust? If you don't have one already, consider setting up a will, a trust (if appropriate), and financial and health care powers of attorney. If either of you already has a will or trust, see if it would be appropriate to make alterations to them. (See our Estate Planning section for more details on this topic.)
  • Should you sign a prenuptial agreement? This can be an uncomfortable subject for a couple that's newly in love, but there are very practical reasons for signing a prenup.
  • Are you planning to have children? If yes, how many and when? There are economic ramifications to consider as well. You'll want to think about this now, so you're prepared when you get the same questions from your grandparent wannabes in particular.
  • Do you both understand the financial implications of having children? They do represent a significant expense over the course of their first eighteen years (or more for some parents—especially in this economic environment). Start saving in the beginning.