How Your Age at Marriage Impacts Your Post-Wedding Financial Situation
How old you are when you get married impacts a number of wedding-related factors, including how involved your parents will be and what types of gifts you'll include on your registry. It also determines what your post-nuptial financial situation looks like for you and your new spouse. Assets, debt, and financial goals look different for a couple in their 20s-who are likely just starting their careers-versus a couple in their 40s-who may have children to support from previous marriages and a hefty mortgage.
"If people aren't coming into the marriage on equal terms [financially], that creates a lot more animosity long term," says Erica Gargol, a partner with Stratos Wealth Partners. That's why it's important to nudge financial planning to the top of your pre-wedding checklist, regardless of whether you're just starting to save or already thinking about retirement. By narrowing down your focus based on your age and stage in life, a couple can make smarter decisions about how to plan for the future.
In Their 20s...
If you're tying the knot in your 20s, focus on understanding each other's financial attitudes, says Kelly Lauterjung, a financial advisor with Baird. A good place to start is by communicating about your relationship with money: What are your saving and spending habits? What was your family's financial situation like? Does the topic of money make you uncomfortable? "It's about talking about financial goals and getting on the same page" says Lauterjung. Discuss which big expenses-purchasing a house, buying new cars, having children-might be coming up in the next five to ten years.
If your career pursuits include furthering your education, figure out how to budget for that as a couple, alongside paying down any student debts you've already incurred. Most experts recommend starting with at least one joint account for essential living expenses and creating an emergency fund with savings equal to three to six months' worth of fixed expenses like rent and food. "The key is transparency," says Lauterjung. "Knowing what you have, knowing where it is located, and how to get access is essential." You should also work on establishing good saving habits together, even if it's just stowing away a minimal amount each month, says Martin Hopkins, president of Hopkins Investment Management. "The earlier you start saving in life, the better you'll do," he says.
In Their 30s...
By the time couples are in their 30s, both parents are typically more advanced in their careers and are therefore making more money. This can be both helpful and challenging-because both partners have experience budgeting on their own, they may be better equipped to look at their finances holistically; the challenge comes when one or both spouses is stuck in his or her spending ways. Instead of using your current financial planner, work with a new advisor together to figure out goals and budgets, says Hopkins. "It's amazing how it brings [couples] together to think through questions like, 'Where do we want to go, and how do we want to do that,'" he says. Communicate about how you've managed your money in the past, how much debt you have, and what accounts are already open. Also, find out if your fiancé is part of someone's estate plan or trust, or a beneficiary of a life insurance policy and how you can get access to this if needed.
If you're ready to start a family, start a college savings plan and decide if it's financially viable if one parent wants to stay home, says Lauterjung.
In Their 40s...
The 30s are the learning years and the 40s are the earning years, says Gargol. "This is when salaries really start amping up and when savings start amping up as well," she says. If one person has more assets or more debt than the other, consider keeping accounts separate or getting a prenup, advises Gargol. This doesn't mean the marriage isn't as romantic as one happening in the 20s, there are just more complicated financial factors to consider, like children from previous marriages and significant assets built up from 20 years of savings.
"Take into account how you want your children versus your new spouse to benefit from your finances," says Hopkins. You can do this by meeting with an estate attorney to update your beneficiaries. Some state laws require married couples to name each other as beneficiaries unless one spouse signs off on it. See if your state is included in the ten community property states that follow this law, says Kerina Graham, Gargol's business partner.
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