A financial guide for newlyweds

Money in matrimony: From the practical to the philosophical, newly married couples need to get on the same page about finances. Here's how to do it.

05 Jun 2019

You're back from the honeymoon. You've opened the gifts—and maybe even written your thank-you notes. And now...here you are, in this new life.

It's time to talk about money.

“Your spouse is one of the only people you can talk to honestly about money, and that's hugely powerful," says Justin Waring, Investment Strategist with UBS. So if you haven't had those deep and meaningful financial conversations yet, it's the perfect time to start.

Three money conversations to have with your spouse

1. The mechanics conversation

“One practical implication of marriage is that it means sharing assets," Waring says. So how will you organize those assets? Will you join all accounts together, or still handle some separately? How will you make investment decisions? These are all questions couples need to decide, and they range from practical to philosophical.

It's a good idea for both people to be involved in long-term decisions about money and investing, says Ainsley Carbone, Total Wealth Strategist with UBS. When one spouse abdicates responsibility for financial decisions, they will gradually lose touch with the finances. That lack of engagement can be a source of friction in the relationship—money is a key source of stress in most families—and it can also be a potential liability.

“Women typically outlive men, so it's especially important for women to be involved in long-term finances and investments so they can be confident enough to take over that responsibility on their own," Carbone says. While it may be morbid to think about, especially in the newlywed phase, both members of the couple should feel empowered to handle things independently if they were forced to.

2. The money language conversation

Two people can each be smart with money, but they can have different attitudes about money. For example, you like to spend, whereas your spouse is a hardcore saver. You don't have to agree on every point, but it is vital to “be aware of one another's 'money language'," Carbone advises.

The last thing you want to do is bury your relationship in the minutiae of item-by-item budget decisions," Waring says, "but you do need to make high-level budgeting decisions explicitly, and as a family."One option is to pool most of your expenses—especially your fixed costs and your savings goals—into a jointly run account, but then allocate some cash flow into individually managed discretionary accounts.

3. The goals conversation

Do you want to buy a home? When? How big? Do you want expensive cars or utilitarian ones? Do you dream of traveling in retirement or working until you're 80?

“Make sure that your goals are aligned and that, as a couple, you are doing what you can to reach those goals," Carbone says. In general, Waring adds, the research shows that savings rates tend to dip around the ages that people are getting married. “It's a time where some people can have a setback meeting their savings goals," he says.

Specifically, if you are combining your resources and becoming a dual-earner couple, there is a tendency to increase your standard of living instead of increasing the amount you're saving. In fact, research shows that in dual-earner couples where just one person is contributing to a 401(k), the contributor often doesn't increase their share to make up for the fact that the other person isn't contributing. Having some concrete goals can help you stay focused on saving.

Four financial action items for newlyweds

As for the more practical to-do items, Waring and Carbone recommend taking these four steps:

1. Review all insurance.

  • Crunch the numbers on whether it's worth it to have one spouse carry health insurance for both. You don't have to wait for open enrollment to add your new spouse to a policy; however, don't wait too long after your wedding date, as many plans have a small window for when this can be done.
  • Can you bundle home and auto to save money? “Even just seeing what your spouse is paying can clue you in to the fact that you might be paying too much,” Carbone says.
  • To decide if you need supplemental life insurance, Carbone suggests asking this question: if anything were to happen to you right now, is there anyone who would be struggling financially because you're no longer alive? If the answer is yes, you need it. If not, then you don't need it right now.

2. Confirm your 401(k) beneficiaries. If you have someone else listed, like a parent or sibling, be aware that some types of retirement plans automatically update with marriage and default to the spouse. “Definitely check,” Carbone says. Also, if it's a second marriage, make sure the first spouse is not still the beneficiary.

3. Update your will. If you have a will, it's important to keep it updated with any major life change, such as a marriage.

4. Visit a financial advisor together. “It's always easier to have your financial advisor frame and mediate money conversations," Waring says. Find one you both like and trust, and see them regularly. Consider it your wedding gift to each other.

Connect with your UBS Financial Advisor

To explore how you can pursue what matters most—together.