Financial Planning 101: What Newlyweds Should Know

You just got married. You're ready to start your life together—sharing breakfast, binge-watching shows, planning a family.

But what about your finances? This may not be the most exciting aspect of your new, “just married" life together, but it's one of the most important. Every newlywed couple should take some time to seriously discuss their financial reality and financial future.

Here are the central topics you should make sure to cover and some tips on how to approach these conversations.

Get to know each other's finances and mindset

If you haven't already done this before becoming newlyweds, you should immediately have a fully honest conversation about the status of your current finances and your approach to financial management. This means being vulnerable and reserving judgment about your new spouse's financial situation and habits.

“This might be the first time you've revealed your full financial picture to another person, so being guarded can be understandable," says Riley Adams, a licensed CPA who maintains Young and the Invested, a personal finance site for young people. “As this is the person you plan to be with for life, you're best served by being honest and upfront."

Sean Mullaney, financial planner and owner of Mullaney Financial & Tax Inc., recommends sharing with each other three months' worth of credit card and checking account statements, two years' tax returns, and a balance sheet (a statement that lists all your assets and liabilities).

Doing so will give you both a good idea of what you each make; your average monthly spending; and what you have and owe as a couple.

“See each other's spending, ask questions," he says. “It could be, 'Is there a problem here?' It's a way to build financial intimacy."

Have a future-focused conversation

Once you've discussed the financial reality of your partnership, the next step is to talk about what comes next. This means discussing your goals and zeroing in on how to meet them.

“Before you make steps in any direction, you'll first want to be aligned on financial goals—ideally both near-term and long-term," says Adams. “Based on those priorities, you should start seeing the best path forward on handling your financial affairs."

For example, Mullaney suggests discussing what you each envision for retirement and what that will cost. Talk about the plan that will make that vision come true.

Get down to brass tacks

The scene- and goal-setting conversations are imperative for getting you on the same page. But there are some more practical decisions that you need to make, many of which will be informed by those first discussions.

Beneficiary designations

Marriage is a “life event," says Mullaney—a moment at which you are permitted to change things like beneficiary designations. Many people may have life insurance beneficiaries listed from their pre-marriage circumstances. It's important to update these.

In most cases, married couples list each other as beneficiaries on their life insurance, but this doesn't happen automatically. Failing to update your beneficiary may result in your life insurance payout being assigned to someone else.

“There are horror stories about pension plans," mentions Mullaney. “Say where they put their sister down at age 22, then they get married at 25, then 20 years later they die and the only beneficiary form is for the sister."

Estate planning

Getting married is a good time to establish an estate plan. Where will you live? Are you buying a house together? Are you moving into one or the other's house? What will happen to that house upon someone's death?

You may decide to establish a mechanism like a revocable trust so your spouse can get control of your house sooner rather than later. The key is to think through your circumstances, potential future scenarios, and legal methods of keeping your estate secure.

Insurance

Insurance planning is another important element to consider at the outset of your life together. You may want to consider everything from auto policies to umbrella insurance. For example, if you each have separate auto policies, getting married is the right time to decide which policy you'll both be on together. Ditto employer-provided medical insurance. Covering both of you on one of your policies may help you save on premiums, deductibles, and other costs. “This can be a nice opportunity to optimize," says Mullaney.

Banking and investing

Many married couples manage a single joint bank account to finance daily life. Others use a his-hers-and-theirs arrangement with separate individual accounts and a joint account. There is no “right" way to set up banking as a couple save whatever you've both agreed upon.

Similarly, there is no prescribed way of allocating your joint investments; the only important thing is that you've agreed on how you're managing them. While some couples assign one person to manage all the couple's investments, in other cases each person maintains their own separate portfolio. The key is being aware of and in accordance on these arrangements, whatever they may be.

Consider hiring a professional

All the topics listed above are complex. Discussing them with a new partner can leave anyone—no matter how financially savvy—feeling overwhelmed. In some cases, the help of a financial professional may help you get a handle on difficult conversations.

Adams suggests professionals for specific situations: “If you've got tax issues, a CPA is your best bet. If you've got student loan debt, perhaps consulting a debt counselor would make sense. If you need assistance with getting your entire financial house in order, a fee-based fiduciary financial planning professional is a good option."

If you do decide to hire a financial professional, Mullaney suggests interviewing multiple potential advisors to see how you feel about them, their fee model, and what are they going to give you for that fee.

And don't forget to think about whether they are a good fit for your partner as well as yourself. Remember, you're in this together now.