Marriage Finances Smart Planning
Marriage finances are one of the most important issues and have the potential to ruin the lives of many happy couples. If you are not married yet, you should sit with your fiancé and discussed finances. It might be important to discuss how you will combine your income or how you will pay your bills. People have very different opinions on money and it is good to talk about your saving and investing goals, your philosophy about money, your spending habits, and your debts. This is all because disagreements about finances is the number one cause of divorce. So getting these issues out in the open and coming to an understanding before marriage can greatly increase your chances of staying together.
We have all heard about pre-nuptial agreements among the rich and famous to take care of marriage and finances before getting hitched. Pre-nuptial agreements can save a lot of hassle if the marriage ends up in divorce. But since most of us don’t get married with an eye towards divorce, many never even consider a pre-nuptial agreement. There are times when one makes sense. If one of you expects an inheritance, has a trust fund, or owns a business, it makes good sense to be specific about how those things will be handled during the marriage and in the event of a divorce.
Finances in marriage issues can start before the knot is even tied. The average wedding now costs over $19,000, a huge sum of money for anyone. Spending such a large sum on a short celebration does not make sense. The new couple could use the money for a down payment on a house or to pay off burdensome debt. Experts say that weddings do not have to break the bank. People can have a fancy wedding for less money. You can plan a wedding that will help you save money and still have have the things that matter most to you.
Couples should be prepared for the marriage and finances tax penalty. The income earned by the second working spouse is taxed at the highest marginal income tax rate of the first spouse. Because of the way married people file taxes, the income has to be combined. This makes it appear as though it were earned by only a single person. The couple ends up paying more taxes because of this. But there are other tax advantage of being married that offset this.
It is best to discuss how you will mix your money before you actually tie the knot. Be sure to get copies of your credit reports and review them together. Decide whether to keep separate credit cards, add names to each other’s credit cards, or get new credit cards. It is important to talk about how you will handle your checking account. Also, how will you save for your financial goals? These money issues have long-term consequences and are important for proper marriage finances.