Personal finances are complex enough for just one person, but when two people join their financial lives together, things can get very complicated. When you find the right partner, it is smart to do the following:
- Change beneficiaries. Life insurance policies, retirement accounts, and mutual fund accounts all have beneficiaries (the people who will receive the funds at your death) named when you set them up.
- Coordinate employee benefits. Couples often have two incomes today, so each has a menu of employee benefits from which to choose. As a result, one spouse may drop a benefit t that is being received via the other’s plan. For example, if one partner receives family coverage for health care for free or at a low monthly cost, perhaps the other can drop that aspect of his or her own plan. One spouse might then be able to add another benefit t at no cost, such as paid education expenses. Your employee benefits officer can help you decide which options to select.
- Update life insurance coverage. Focus on term life insurance for the bulk of your needs.
- Review auto and homeowner’s insurance coverages. Also inventory your personal property.
- Get out of debt. One or both of you may bring debts into the new family. Because a couple can live together a little more cheaply than two individuals who live apart, funds can be freed up to pay off credit card, student, and other loans. This debt reduction has an added benefit: It sets the stage for getting a mortgage to buy your first home.
- Save for retirement separately. Day-to-day living expenses will go down somewhat when you team up as a couple. Use some of that money to allocate additional amounts to your individual retirement plans.
- Update estate transfer plans. With a new number one in your life, you should change (or set up) your will, durable power of attorney, living will, and health care surrogate designations.
- Close redundant bank accounts. Reducing the number of accounts that each partner brings into the marriage can save money on account fees. Decide which accounts are yours, mine, or ours.
- Manage money together. All of the topics in this chapter on financial planning should be undertaken as a team.