This was originally published on Monday, November 9, 2015, in the Pacific Daily News. Click here to subscribe to the PDN.
When two people decide to marry one of the hardest transitions can be finances. No longer are you responsible just for you. People have different views of money. But if you plan together, accept each other’s views and compromise, a solution can certainly be found.
Budget. It is difficult to create a budget when you are first starting out. You are unsure of how much money is spent on monthly bills and necessities especially if you have not lived together before you were married. Track your expenses for the next few months. Include your monthly expenses, entertainment, food, transportation costs, and everyday purchases. Think about all things. We tend to forget about things such as auto insurance and life insurance premiums, property taxes and other nonrecurring expenses when creating a budget. Add these up and subtract it from your incomes. If you have a surplus allocate it to work on your financial goals. If you fall short think about ways to start cutting back on the costs.
Debt. A point of stress in marriage is debt. When young couples merge finances they usually bring with them debt from school, car loans, or maybe even a mortgage. Some may even go into debt to pay for their wedding. You will want to start paying down your debt.
A pitfall that many couples face is that there are two incomes and so there is more money to spend and more money to eat out or purchase things you have wanted. This can put you further in debt. In fact, two incomes can be cost effective and shared living expenses can save money. Couples should agree on a limit of how much they can spend on a purchase. Decide on a threshold amount that you believe warrants both of you to agree. For example a purchase over $300 requires both spouses to communicate.
Even if you are swimming in debt, put aside a little money for yourselves and work that into the budget.
Friends/family in need. There may come a time were you are financially able to help a loved one. Discuss each of your comfort levels. Each case will be different but it is important to evaluate it as a couple.
Update beneficiaries. Now that you are married take a look at all your insurances, retirement funds, and other financial accounts. You may want to add your spouse as your beneficiary. Review your health insurance from your employer and decide which of your companies offers the best policy. Life insurances are extremely important because it can help supplement income lost due to a death of a spouse. Combining your auto and home insurance may save some money as well.
If you have a will you may want to revise it to add your spouse. If you don’t have a will get one done as soon as possible. Dying without a will can cause tension and arguments among surviving family members.
A Power of Attorney is useful if your spouse is unable to be present to give instructions or to sign important documents. It gives your spouse the legal authority to represent you and your wishes. You can give a general power of attorney for a broad coverage or a special power of attorney for specific events. A durable power of attorney will give your spouse legal authorization to the type of healthcare interventions you want if you are unable to speak for yourself.
One person should be in charge of paying the bills and balancing the checkbook. This does not mean to leave out your spouse. Your spouse should still be very aware of what your finances look like. Take time to hold monthly meetings and discuss how your money is being spent.
Michael Camacho is president and chief executive officer of Personal Finance Center. He has more than 20 years of experience in retail banking and at financial institutions in Guam and Hawaii. If there is a topic you’d like Michael to cover, please email him at firstname.lastname@example.org and read past columns at the Money Matters blog at http://www.moneymattersguam.wordpress.com.