Financial planning may be the least romantic yet one of the most important things on an engaged or newlywed couple’s “To Do” list.
It’s easy to want to wait or ignore the numerous things that should be done when “two become one” but according to Doris Brown, marketing and business development coordinator at Alcoa Tenn Federal Credit Union, the options for couples today can fit most every need.
“Savings accounts are a safe and efficient way to accumulate funds,” said Brown. “You can have immediate access to your funds while you build liquid savings for emergencies, education, even vacations. These accounts are federally insured and also pay dividends. You can open one with a minimum opening deposit of $5,” she said.
“Money Market accounts are a good form for short-term savings. You have immediate access to funds, and you can maximize your dividend earnings,” said Brown.
Brown said that checking accounts are a must have for everyone. “This is an account that earns dividends which are compounded monthly. It allows members to earn dividends, plus have access to funds anytime.”
For long term savings, Brown said to consider a certificate of deposit account. “It earns dividends based on the opening balance and term invested. It also allows you to earn higher dividends on larger account balances that are deposited for longer time periods,” she said.
Finally, a Visa credit card provides an immediate line of credit. “It allows you to charge purchases and obtain cash advances,” Brown said.
Following is a financial “To Do” list for newlyweds from Jeremy Vohwinkle, author of the personal finance blog “Generation Xfinance.” For more information visit the Web site at www.genxfinance.com
• Change your beneficiaries. Go through all of your investment accounts, savings accounts, 401(k) plans, IRAs, insurance policies (life, health, auto, homeowners) and other accounts and review your beneficiary designations if you want your new spouse to own these assets should something happen to you.
• Review your insurance coverage. While you have those insurance policies out, review them for under-coverage, duplicate coverage, or lapses in coverage. If you’ve combined households, you’ll be dropping one homeowners or renters insurance policy, but make sure that the remaining policy has enough coverage to protect your combined household goods, especially items that are typically limited, such as jewelry, computer equipment, collectibles, etc.
If both of you have health insurance coverage, review the plans closely to see if it makes more sense financially and from a benefits standpoint to cancel one of the plans or keep both.
You typically have 30 days after your marriage to add your spouse as a dependent without providing evidence of insurability.
• If your name changed, get a new Social Security card from the Social Security Administration (www.ssa.gov). Not only will you need this for ID purposes next time you change jobs, but it’s important to notify the Social Security Administration of your name change so your retirement account is properly credited with your earnings.
• If your name changed, you’ll also want to get a new drivers license, which again, is often used for identification. Call your local Department of Motor Vehicles for details on how to go about doing this.
• Make a will or update your existing will. Don’t delay this important item.
• Review your financial goals (retirement, reducing debt, buying a new home, etc.), and set new goals as a couple.
• Review your credit card and other debts and develop a plan for paying them off. If you haven’t already done it, now is the time to obtain copies of your personal credit reports and study them together. Contact Experian at (888)397-3742, Equifax at (800)685-1111, and TransUnion at (800)888-4213. Be prepared for some surprises, since many engaged couples don’t reveal all of their financial situation to their fiancé.
• Calculate your combined net worth. It’s important to know where you stand financially as a couple. Use bank statements, investment statements, credit card statements and other documents to list your combined assets and your combined debts to obtain a “snapshot” of your financial situation.
• Develop a budget. Calculate your combined income and subtract your combined monthly expenses and debt repayments. Hopefully you’ll have something left over to build an emergency fund, add to your savings, or invest.