Before I went surfing in SoCal at FutureProof, I drove back to Columbus, Ohio, to see two of my closest friends from college get married.
Columbus is only a seven hour drive away, and the way flight prices and general airline issues look these days, a road trip was just what the doctor ordered. But, of course, no good deed goes unpunished. 30 minutes into the drive, I got a flat tire.
It turned what was supposed to be a seven hour drive to a total of twelve hours.
Thankfully, I was able to pop on the spare, drive to the closest tire shop, and get the open wound patched without having to fork over the money I “saved” by driving.
Nonetheless, I got there in one piece. It was a beautiful ceremony and it felt great to reconnect with our friend group that we haven’t seen since when we were all young, dumb, and single.
Love and marriage is a beautiful thing that should truly be cherished. But after the honeymoon and the first few weeks of packing/unpacking for your next chapter, the real test begins.
It’s more than just a perpetual sleepover with your best friend. It’s a legal partnership, and building a life with another person comes with the reality of sharing a life with another person and, for better or worse, all the emotions they bring. Much of the deep, dark feelings around specific topics may not come up in the early formative years of the relationship.
One of the first to come up, you guessed it: money.
Decisions around how money is earned, spent, and saved can be a lifelong struggle if the right foundation is not in place.
So, by the power vested in me, here is how I help newlyweds plan for their new life together so they can spend more decades cherishing the love that’s supposed to last a lifetime and less time butting heads over something that will come and go.
When Two Become One
I’ve written about money scripts and the different ways to view money here before. That is a great place to start your conversations about money before coming to someone like me, a financial advisor.
Once we have a base understanding of your fears and hang-ups, I start with the basics.
Where the money is and where it’s coming and going from.
The decision to combine or keep the finances separate will vary from couple to couple. However, if you do decide to combine finances – I love the idea of His and Her (His/His or Her/Her) bank accounts in conjunction with a family joint account for shared expenses.
This way, you’re not looking over each other’s shoulder for why you need yet another pair of shoes or explaining how that $10 three-way parlay wasn’t such a bad idea after all.
You’ll have plenty of other things to build together, but I will always vouche for a healthy amount of separation in this area. The joint account will serve as a place for shared expenses, like the mortgage, household bills, and emergencies.
So many people want to fast forward to investing in hopes of seeing their net worth grow, but trust me, more money isn’t the solution to healthy relationship. One of you may hold more debt than the other. Maybe you racked up some good credit card debt from the honeymoon.
Make sure your cash cushion is in a good spot before investing that money for years and/or decades.
This leads me to our next topic: planning for shared goals.
The Vision is the Mission
Once I have an understanding of how money is earned and spent, the real work begins.
Of course, we don’t know what the future will look like, but you may have an idea of what you want it to look like. Therefore, we don’t have to be precise but we do need to have something to aim at, to know where we’re going. So no matter where the money will ultimately go—your first house, anniversary trip, sending the kids to college, retiring someday—I like to start to with the end in mind and work backward.
For new couples, though, let’s start with what you’re on the same page with.
Kids Education:
Perhaps it’s to grow the family.
Beyond what it costs to simply raise a child these days, saving for their post-high school education requires extensive planning from start to finish.
First, I ask couples individually how they paid for college. Did your parents help you out, or did you pay for it yourself through scholarships or your own money?
It’s important to understand what expectations or beliefs each partner has around paying for education, as that will guide how you prioritize saving for their kids. Once we know the answer to that question, we can start to figure out the best vehicles for saving, whether it’s a 529 plan, a brokerage account, or something else.
Life In Retirement
The next step is discussing one of the most significant and challenging topics: retirement.
One of the most common issues couples face is mismatched expectations about when and how they plan to retire. Do you both want to retire early? How will you spend the first several years?
Do you envision moving to a different state or perhaps downsizing to a smaller home?
I ask couples to paint a picture of what their retirement years look like—everything from daily activities to travel plans. These discussions can be a huge eye-opener, as many couples don’t realize how different their visions may be.
Once we’ve got a clear image, we start working on a roadmap to fund that retirement lifestyle. Whether it’s contributing to IRAs, 401(k)s, or taxable accounts, the earlier we get on the same page, the better.
Life Insurance:
Retirement and education planning are big-ticket goals and a long ways away. There’s a lot of life to live inbewteen.
If you commute to work—by bus, train, or car–you’re taking a risk. If you live in a big city, you’re taking a risk. It’s great to plan for all the things we want in this life, but the unfortunate reality is, unexpected circumstances happen all the time.
Unexpected tragedies do happen. Life insurance ensures that funds are there to potentially replace all the things you’re no longer there for.
Now, life insurance typically gets a bad wrap because of the way its sold to the public, but I can’t say enough how crucial it is to a functional financial foundation.
For young couples, especially those with young children or rely on each other’s income to maintain their lifestyle, it’s a safeguard to ensure that if something happens to one partner, the surviving spouse won’t be left emotionally and financially broken.
The type and amount of coverage you need will depend on your goals, income, assets and debts, and family situation. My friend Cliff at Yield to Maturity, writes, “There are some additional variables when calculating life insurance such as final expenses or if someone would like their death benefit to be enough to cover all expenses until their children reach the age of majority in addition to funding education in full.”
Life insurance is a good place to start, but the next step is ensuring these funds are used for the intended purpose if you’re not there to see it happen.
This leads me to my favorite topic: estate planning.
Estate Planning
I’ve written about a few different misconceptions people have about estate planning here.
Estate planning is often seen as something for the wealthy or older generations, but it’s actually one of the most critical steps for young couples—especially if you have children or significant assets or debts. Many millennials and Gen Zers are also pet owners. I’m sure you would want to make sure they go to a good home if you weren’t there.
Why do it for young couples with little money? Simple: protection and peace of mind.
Even if you don’t have a large estate, having a basic will and assigning powers of attorney ensures that your wishes are respected and your loved ones aren’t left in legal limbo if something happens.
Estate planning allows you to dictate how your assets will be distributed, who will care for your children (and/or pets), and how your healthcare decisions will be made if you’re unable to make them yourself.
Trust me. No one wants to think about these situations. But the consequences of not thinking it through are much worse. And if you start early, you can adapt your plan as your assets grow and your family situation changes (likely for a lower cost).
I can’t tell you how to handle every financial challenge you’ll face, nor which ones will be the cause of a silent car ride home. But I can help you plan for what’s next. And with the right foundation in place, you’ll be prepared to navigate life’s joys and tears—together.
Thanks for reading.
Until next time.
