Business & Tech

Financial 'I Do's' Before Your Wedding: Tips from a Certified Financial Planner and Newlywed

How to best handle existing assets, the right insurance coverage and how to manage individual portfolios.

By Sarah Mouser, CFP and Financial Advisor

In September of 2013 I married my long-time boyfriend. While the decision was years in the making, this special day brought a number of surprises and important next steps that I often advise others on, but had yet to do for myself.

As a financial advisor, helping others to manage all aspects of their financial planning and investment needs is what I do every day. I spend much of my time meeting with clients, portfolio managers and planners to determine and coordinate effective planning, investment and tax strategies that when September rolled around I realized—it was time to take my own advice.

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After sitting down with my then fiancé, we mapped out the best financial plan for our future including how to best handle our existing assets, the right insurance coverage, and how we should manage our individual portfolios together. 

Another important thing we talked about was what to do with all of our wedding day cash. Every couple has their own ideas; some think it’s best to use towards the down payment of your first home, or save it for a rainy day but as a Certified Financial Planner™ (CFP®) here are a few tips every couple should consider before their big day:

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  • Establish an Emergency Fund – Use part of your wedding cash to start your emergency fund if you do not already have one. As a general rule of thumb, an emergency fund should be 3-6 month worth of living expenses.  The fund you set-up should be safe and liquid.  Keep it separate from your riskier retirement investments and in an interest bearing savings account.
  • Save for Retirement – Be sure you are contributing to your company sponsored 401(k) or retirement plan.  If your employer offers a matching contribution benefit, be sure to take full advantage of it.  Otherwise, you could be leaving free money on the table.  If you do not have access to a retirement plan through work, there are other options to consider, such as opening an Individual Retirement Account (IRA) or Roth IRA.
  • Protect Yourself with Life Insurance – This is something no newlywed wants to think about. But if something should happen to you or your spouse, it is important that your family have the liquidity to pay off debt, final expenses, medical bills, college tuition for your current or future children, and more. There are a number of online calculators available to help you determine how much life insurance you may need.
  • Draft a Will and Power of Attorney – Be sure you and your spouse create a blueprint for the distribution of your assets if something should happen to either one of you. In the event you were to become disabled, you should designate someone (usually your spouse) to handle your financial affairs. To do this, you will want to find an attorney who specializes in drafting legal documents and wills. A lot of married couples do not have these important documents in place, so getting started now puts you both ahead of the game.
  • Reduce Your Debt – Entering your first year of marriage, it is a great idea to set a goal of reducing your high interest debt, such as credit cards. Consider setting up a joint bank account to help get the process started. Saving a portion of your wedding cash and putting it towards paying down debt will help put a dent in your post-wedding bills. 

When you are looking forward to your future, it is easy to get wrapped-up in finding the perfect dress or choosing a centerpiece that will really makes the room “pop”. It is important to remember that setting up a strong financial foundation is just as important—if not more. By getting the process started now, you and your soon to be spouse can begin working toward a long and fruitful financial life together. 

About Sarah Mouser:

Sarah is a financial advisor in Savant Capital Management’s McLean office and is a member of the Advisory Team.

 


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