Date: Fri 05-Mar-1999

Publication: Bee

Author: DONNAG

Quick Words:

brides-finances-money-CSCPA

Full Text:

BRIDES: Newlyweds: How To Start Off On A Sound Financial Footing

Traditionally, married couples agree to take their mates "for richer or for

poorer." The Connecticut Society of CPAs (CSCPA) says newlyweds can increase

their chance of making it "for richer" by devoting sufficient time to

discussing the many aspects of their financial life. Here are ten important

topics you and your new spouse should address.

Topic #1: Values

How do you feel about money? Are you a spender or a saver?

The more you understand about your partner's values and attitudes concerning

money, the easier it will be to avoid conflicts and misunderstanding.

Topic #2: Money Management

Decide who will have the primary responsibility for managing money, paying the

bills, and balancing the checkbook. If you are a dual-earning couple, one of

the first important decisions you will need to make is whether you will

maintain separate accounts or pool your income.

Do whatever works best for you, but keep in mind that, generally, it's easier

to manage household expenses for one joint account.

Topic #3: Savings

Your first priority as a couple should be to set up an emergency fund equal to

three to six months' of earnings. Keep this cash in a bank savings account or

money market account you can access quickly.

Once your safety net is in place, continue a plan for regular saving, striving

to save at least ten percent of your income. Automating your savings program

is a great way to ensure you don't stray from your savings goals. Arrange to

have a preset amount each month transferred to a mutual fund or similar

investment.

Topic #4: Insurance

Increased health care costs make it more important than ever to coordinate or

consolidate health insurance so that you are not paying for duplicate

coverage. Review each spouse's health insurance plan and compare coverage and

costs to determine which plan best suits your needs and finances.

Look at your life insurance as well to determine whether you have adequate

coverage. For most young married couples, term insurance is the most

reasonable way to provide for the unexpected.

Since statistically, young married couples are more likely to be disabled than

to die prematurely, do not overlook the importance of disability insurance,

which provides monthly income in the event illness or an injury makes you

unable to work.

Topic #5: Debt

These days, it's not uncommon for young couples to bring debt into a marriage.

Whether a student loan, car payments or credit card debt, young marrieds

should devise a workable strategy for paying off high-interest loans and

credit cards.

Be sure, too, that you and your spouse compare credit cards and eliminate

redundancies to save money on annual fees. In doing so, bear in mind that it's

a good idea to keep at least one card in your own name to maintain an

individual credit rating.

Topic #6: Retirement

Remember, it's never too early to look ahead to spending your golden years

together. Take advantage of company-sponsored 401(k) plans, IRAs and other

retirement vehicles. The more you save now, the more your money will grow

through the compounding of interest.

Topic #7: Investments

Selecting the right investments depends on market conditions, the amount you

have to invest, your financial goals, and your willingness to take risks. The

younger you are, the more you can invest in stocks, which tend to offer the

highest yield over the long term.

Topic #8: Taxes

Most two-earner couples will end up with a higher combined tax bill than they

would have as single taxpayers with the same income. That's why it is

important for you and your partner to make a commitment to year-round tax

planning.

In terms of filing status, don't assume you should file jointly now that

you're married. While doing so generally results in a lower tax liability,

there are some instance when you are better off filing separately. If you're

not sure, check with a CPA or other tax professional.

Topic #9: Wills and Estate Planning

If you already have a will, you'll need to have it updated to reflect your

marriage. If you don't, you and your spouse should have one prepared. If you

die without a will, state laws dictate how your property will be distributed.

Topic #10: Goals

Whether your goals call for buying a house, starting a family, going on

vacation, retiring to school, or opening your own business, you'll need to

discuss your plans with your spouse and begin to take steps to align your

financial plans with your overall goals.