Whether you are getting married for the first time or planning for a second, the subject of finances will play a big role in the relationship.
Here are 14 well used tips to guide you through the process:
#1 – Have an in-depth discussion on your philosophy on money
- Who is the Saver and who is the Spender in the relationship and how will you coexist?
- How do you both feel about debt and what is your comfort level?
#2 – Be honest about your debts & assets
- No one likes surprises especially one that involves a large debt that wasn’t disclosed earlier
#3 – Don’t hide or lie about your spending habits
- One of the major causes of divorce is financial incapability and the stress of chronic debt caused by over spending.
- Mistrust is also created and any relationship would be hampered by a lack of honesty.
#4– List your financial goals & motivation
- What is really important to the two of you, is it the purchase of your first home, a major vacation or is it to be financial independent and debt free?
#5 – Create a budget
- This includes for short term needs like property taxes, ICBC car insurance and income taxes. Long term needs could include down payment for a home, retirement or a major vacation.
#6 – Schedule money matter talks regularly
- This is important just to make sure to see if you are on track with savings goals, reduction of debt and comfort level with variable investments that have exposure to the stock market
#7 – Decide on if you will use the services of a financial advisor OR are you “Do It Yourselfers”
- If you are inclined to be a DYI does your spouse share your enthusiasm? If you prefer to deal with an advisor what traits are you both looking for?
#8 – Make a decision on separate or joint bank accounts
- It’s very common for each partner to maintain their own bank account and credit card to retain their own independence. Realistically having one account strictly for joint household expenses that you both contribute to, ensures the bills are paid in a timely manner.
#9 – Change beneficiary designations
- This includes personal life insurance, RRSPs pensions plans, TFSA and Non-Registered assets.
#10 – Review existing life & disability insurance
- This is to ensure it is adequate to cover debts and replace income that would have been generated by a deceased spouse. If one or both of you are self-employed, look at a personal disability policy or Critical Illness insurance.
#11 – Examine each other’s group benefit package
- If you both have a benefit package through your employer decide which is the better package and consider reducing/eliminating the plan that offers less benefits.
- Some couples carry coverage through both plans as they use one package for one set of benefits and second plan to pick up deductibles or co-insurance not covered under the first.
#12 – Notify your employer pension plan of your marriage
- For those fortunate enough to have an employer sponsored pension plan it’s imperative that a spouse be appointed as beneficiary. The “Right of Survivorship” on a pension plan is of far greater value to a spouse than the “Commuted Value” to a child or the estate.
#13 – Create an Estate Plan
- This includes rewriting Wills, Powers of Attorney & Representation Agreements.
- This is especially important on blended families with children from a first marriage
#14 – Discuss your feelings on retirement and make a plan
- I understand when you are in your ‘20’s or early ‘30’s that retirement is such a faraway concept, but it happens, and it happens faster than any of us expect!
- Have the conversation early so that you both have the same vision of retirement looks like