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Newlyweds: Making Plans for Life
Lay it all on the table. It's important to approach money as a team from the start. The first step is for both partners to open the books on their financial lives: credit histories, outstanding debts, bank balances, and other assets and liabilities. This is also a great time to list each other as beneficiaries, if you haven't already, on 401(k)s, IRAs, insurance policies, and checking and savings accounts. "There really shouldn't be any secrets," says Jeff Kostis, a financial planner in Vernon Hills, Illinois, who specializes in counseling newlyweds.
Establish a system. Joint or separate checking accounts? (My advice: For many people, it works to keep small separate accounts for personal expenses and put the bulk of your money in a joint account.) Shared or individual credit cards? Who writes the check to the landlord or mortgage company? Many young couples find that answering these questions in advance helps to avoid potential tension.
Treat this aspect of the marriage like a business partnership, Kostis advises. Each one of you should keep one line of credit open in your own name (a card with a small credit line should do it). Your credit report is like your Social Security number: Whether you marry, divorce, or become widowed, it stays with you (and only you) for life, so it's important to maintain a record of good fiscal behavior.
Set goals and figure out the trade-offs. Work out your shared financial goals, then decide on a plan for achieving them. Whether it's graduate school in one year or a home in five, it's important to spell it out to make sure you're both on the same page. Drexel University students Josiah Kiehl, 22, and Prineha Narang, 19, got engaged in December. They haven't even set a date yet, but they're already wondering how they're going to pay for the wedding. "We will both have about $50,000 in loans when we graduate," Kiehl says. "And as full-time students, we don't make a lot -- Prineha has a student stipend, and I've got a paid internship with Amazon.com -- so we're still deciding whether we should do something small now, then save the big event for later." Smart thinking, since the average wedding costs $21,804 -- a big chunk of change that new couples could use for other purposes, like a down payment on a home.
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