Given the average age for marriage in Canada is 30.7 years, it is reasonable to infer that most newlyweds have been working, establishing themselves, and perhaps living together in a common-law relationship before their wedding day. Whether you’ve been together for years or just starting out, it’s never too late to merge your finances. In this blog post, we’ll share four valuable tips to help newlyweds navigate the often challenging, but necessary world of financial planning.
Open the Lines of Communication
Communication is the key to any successful relationship, and this principle holds true when it comes to managing your finances as a couple. It’s crucial to have open and honest dialogue about money. Lay everything on the table, from your current financial situation to your financial goals. Together, determine the best approach to merging your finances. Do you both feel comfortable with joint accounts for everything, prefer completely separate accounts, or something in between? There is no right answer, but it is important to make this determination together to set the foundation for a harmonious financial journey as a couple.
Teamwork Makes the Dream Work
Begin by setting clear financial goals together, such as paying off debt, saving for a house, building an emergency fund, and planning for retirement. If you’re considering children, factor in the average cost of raising a child (according to Statistics Canada it is likely more than $16,000/year). Once you have a vision, create a budget to align with your goals.
In this financial journey, teamwork is essential. Consult with each other before significant purchases, establishing a mutual threshold. This collaborative approach minimizes conflicts and ensures you’re both on the same page. Remember, as a team, you can conquer any financial challenges together.
Don’t Overlook Estate Planning
While it may feel early to think about estate planning, it’s a vital aspect of your financial journey as a couple. Estate planning extends beyond the creation of a will. It involves designating beneficiaries for various assets, such as work benefits, life insurance policies, and retirement accounts. Additionally, it’s crucial to establish clear right-of-survivorship arrangements for all joint accounts. Depending on the language in the account agreement you may need to clarify this aspect.
In the unfortunate event that something happens to either of you having a well-thought-out estate plan can make a world of difference. It ensures that your assets are distributed as you wish and provides financial security for your surviving spouse.
Schedule Regular Check-Ins
To ensure that you stay on track with your financial goals, make it a habit to have regular financial check-ins. Ideally, aim for a monthly sit down to review your budget, track your progress, and discuss any changes or adjustments needed in your cash-flow analysis. At a minimum revisit your financial plan annually, to account for any changes in your financial situation or goals. This practice will help you adapt to the evolving circumstances of your married life and ensure your financial plan remains effective.
Merging finances as newlyweds can be both a challenging and rewarding journey. These tips can help you and your spouse build a strong financial foundation that will support your shared dreams. Remember that open communication, clear goals, teamwork, estate planning and regular financial check-ins are the keys to financial success as a couple. Embrace these principles, and if you need help along the way, know that our Wealth Advisors are here to help, in any way we can.
If you’d like any information on financial planning, investing or estate planning please contact us.