Smart Financial Planning for Newlyweds: How David & Anna Prepared for Marriage

David and Anna met during their sophomore year in college, bonding over late-night study sessions and a shared love of hiking. Now, with diplomas in hand and a wedding on the horizon, they’re ready to start their life together. But as they planned their wedding, they realized they needed to address something equally important: their finances.

One evening, they sat down at their favorite coffee shop with a notebook and laptops to create their financial roadmap for marriage.

Open the Lines of Communication

The first thing David and Anna did was have an honest conversation about money. They shared their income, savings, and, most importantly, their debts. Anna had student loans, while David had a small car loan. They discussed their financial goals, like buying a house in five years and traveling to Europe for their anniversary.

Set a Joint Budget

With their individual expenses outlined, they worked on creating a joint budget. They agreed on how much they’d allocate for rent, groceries, savings, and discretionary spending. They decided to use a budgeting app to track their progress, ensuring they stayed aligned on spending habits.

Establish an Emergency Fund

Anna suggested they start building an emergency fund. Although David already had some savings, they wanted a joint account specifically for unexpected expenses like medical emergencies or car repairs. They set a goal of saving three to six months' worth of living expenses within the next year.

Review and Combine Insurance Policies

Since they were planning to live together after the wedding, they reviewed their insurance policies. David was surprised to learn he could add Anna to his health insurance plan through his new job. They also started researching renter’s insurance to protect their belongings.

Discuss Long-Term Goals

During their financial discussions, Anna brought up retirement savings. Although it seemed far away, they both understood the power of compounding. David planned to contribute to his 401(k) at work, while Anna researched opening a Roth IRA until she landed a full-time position with benefits.

Protect Each Other’s Future

Understanding the importance of being prepared for the unexpected, they investigated life insurance and estate planning options. They decided to purchase term life insurance policies to cover potential debts and future expenses. They also planned to draft simple wills after the wedding to outline their wishes.

Decide on Joint or Separate Accounts

The couple debated whether to combine their finances completely or keep separate accounts. They ultimately decided on a hybrid approach: a joint account for shared expenses and individual accounts for personal spending.

Tackle Debt Strategically

To address their student loans and car loan, David and Anna devised a repayment strategy. They decided to focus on paying off Anna’s higher-interest student loan first, while making minimum payments on David’s car loan.

Seek Professional Guidance

Feeling overwhelmed, David suggested they meet with a financial advisor. They wanted experienced advice to ensure they were on the right track. The advisor helped them refine their budget, offered tax-saving tips, and recommended investment strategies for their future goals.

Sources:

https://www.kiplinger.com/article/saving/t065-c001-s003-financial-to-dos-for-newlyweds.html
https://www.securian.com/insights-tools/articles/pre-marital-checklist.html