The church and reception hall are reserved, the dress is selected, the invitations are addressed, the photographer and caterer are ready. You might even have your new residence “ready-to-go.”

What have you forgotten? More and more smart couples are realizing they should start planning their financial future in advance of the “big day,” according to LSU AgCenter family economist Dr. Jeanette Tucker.

Numerous research studies have cited money as a leading cause of disagreement in marriage. Even Dr. Phil echoes this research by stating that money is “the number one problem in marriages, and the number one cause of divorce. People often underestimate the commitment in merging two lives together.”

Creighton University researchers in a 2003 study found that the most serious challenges to new marriages happen in the first five years. Four of the top five issues were financial: balancing job and family, debt brought into the marriage, the husband’s employment and finances (in general).

So what can a newlywed couple do to protect themselves from marital tension and build a sound financial future together? Tucker offers these financial tips for newlyweds – and, she adds, even those that are not-so-newlywed.

– Work together to set realistic financial goals. Goals should be SMART, that is, specific, measurable, attainable, realistic and timebound.

– Set up a household budget and stick with it. Be open with each other about your income. Work together on following your spending plan and tracking expenditures.

– Put your checking money into one checkbook to make accounting and bill paying easier. Make joint decisions on spending. Pay the bills together so that you can both share in the financial health of the family. Use this time to discuss your finances, your dreams for the future and any issues that have developed.

– Pay yourself first by making savings a part of your budget. As a rule, you should begin by saving at least 5 percent to 8 percent of your monthly gross income in your 20s. Double this in your 30s and 40s by saving 15 percent to 20 percent monthly. By combining households, you should be able to reduce expenses and build cash reserves. Invest reserves in a 401(k) or mutual fund. If only one income is needed to pay the bills, use the other spouse’s income to save or invest.

– Consider your approaches to handling money. Is one person a spender and one a saver? Establish ground rules for making spending decisions fairly. Make a list of upcoming purchases together and prioritize them together. Although financial independence is important, it must be balanced with accountability.

– Decide how your pre-wedding debts, such as student loans, will be handled. Get your student loans consolidated to freeze the interest rate. Make this your top priority, so you can get going toward real family wealth.

– Share your credit reports with each other. If either you or your spouse has had trouble getting credit alone, try setting up a joint account to capitalize on your shared income and the other person’s stronger credit history.

– Establish an emergency fund. Once your pre-wedding bills are paid, your first goal is to build an “emergency fund.” Have at least three-to-six-months worth of salary set aside in this fund. Stash additional funds in money market funds, certificates of deposit or treasury bills as a backup.

– Consolidate your credit cards to avoid having twice as many cards as you need (and unnecessary annual fees). Teach yourself credit card discipline, pay bills on time and strive to pay balances in full each month.

– Start planning now for buying your first home. Evaluate your financial fitness and build a healthy credit score. Explore if you qualify for low-interest, first-time home buyer programs.

– Evaluate your tax status. Make good tax decisions to pay only what you owe.

– Update beneficiaries on life insurance plans, retirement and other plans at work and IRAs to your new spouse. Notify creditors if you change your name.

– If both incomes are needed to pay expenses, be sure to have adequate life insurance. Term life insurance is usually more affordable for young married couples. A payout rule of thumb is 10 times your annual income.

– Draw up a will and living trust once you are married. If you and your spouse pass away without an established will, a court or state laws will dictate how your assets will be distributed and charge your estate high fees for the process.

– Evaluate your employee benefits and your other options. Consolidate medical insurances to save money. If you both have group plans, you might be able to save out-of-pocket premium costs by having one plan cover both of you. If you both work, check the benefits to see if you can save money or increase your return. Not all 401(k) plans are identical. If you can’t max out both spouses’ plans, consider investing to the maximum in the 401(k) that has the higher employer match.

– Consider establishing IRAs. Combined with a 401(k), the favorable tax treatment from a traditional IRA or Roth IRA can be enormously valuable in the long run.

– Be certain to let each other know where important documents are kept.

For related family economics and consumer topics, click on the Family and Home link on the LSU AgCenter homepage at www.lsuagcenter.com. For local information and educational programs, contact an extension agent in your parish LSU AgCenter office.

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On the Internet: LSU AgCenter: www.lsuagcenter.com
Contact: Jeanette Tucker (225) 578-5398 or Jtucker@agcenter.lsu.edu.
Editor: Mark Claesgens (225) 578-2939 or mclaesgens@agcenter.lsu.edu.