It’s the time of year when wedding bells are ringing. I remember many years ago planning my wedding and marriage to my handsome soldier. Just recently, we welcomed new spouses into the lives of many of our military friends. It is wonderful to see our military family grow. It made me wonder, though, how does this affect their lives financially?
The truth is, when you marry you open up a world that is completely unknown to you before – a world where everything is shared responsibility. Until I was married, only I was responsible for my spending habits and my credit. At that time in my life I didn’t have Scott Halliwell, a CERTIFIED FINANCIAL PLANNER™ practitioner with USAA, just a click away online to reach out and ask for advice. But now? Now I can for you.
Tara: We just got married, now what?
Scott: If you didn’t discuss it before you got married, now is the time to have a serious financial conversation. You’re a team now, so you need to treat your finances that way. Lay out your entire combined financial picture to know where you’re starting from together. List out any saving and investment accounts. List out all debts. Go through any and all insurance coverage. The goal with this overall financial grounding exercise is for each of you to understand what your new team’s financial picture looks like so that you can begin to build on it going forward.
You’ll also need to determine if you want to combine accounts and make sure you change the beneficiary designations on your life insurance and retirement accounts. Finally, talk about your financial goals so that you know what’s important to each of you.
Tara: How do we decide who will handle the finances?
Scott: Look at each of your strengths and weaknesses and then decide together how to best leverage what each of you brings to the table. I strongly encourage that both of you be involved at some level. For example, even if you determine that the Service member is the strong one and will manage everything, how will that work if they are deployed?
Tara: Where do we start when it comes to forming a budget?
Scott: Start by gaining a detailed understanding of where you’re currently spending. Track your spending for a couple months. Then step back and assess where to cut back, if needed. The ultimate goal of budgeting should be to have money available each month to save.
Tara: What is the biggest financial mistake that most newlyweds will make?
Scott: One of the biggest mistakes is letting the euphoria and excitement of being newly married overtake their judgment with their money. People often have this romantic notion of all the things a new couple should have and do and unfortunately many try to bring the dream to life before they have the money to do so.
Tara: Should we pool our money and go joint checking?
Scott: That is a personal decision. I’ve seen it work both ways. It is critically important though, that you have an agreed upon approach, whatever it is that you choose.
Tara: If my spouse has credit issues or bad debts, will that affect me? Or, if my spouse has excellent credit, will it help mine?
Scott: There is no such thing as a joint credit score. We all have our own score so one spouse’s great or terrible past credit behavior has zero impact on the other’s score. The act of getting married won’t impact your credit. Where your spouse’s good or bad credit issues will affect you is when it comes to applying for credit together as a couple.
Tara: Are there things we should consider or be aware of specific to our military journey?
Scott: There are two big places your military journey will impact you financially that will be different than your civilian friends: PCS and deployments. Constant movement can make it difficult for military spouses to maintain gainful and ever-improving employment. It also creates the opportunity to overspend initially at each new duty station in making your new place a home and adjusting to your new area. Finally, it can make homeownership difficult and in many cases, a bad idea. Of course, deployments add a whole new level of potential complication to your finances.
Just to be clear though, these issues don’t mean you can’t thrive financially as a military couple. It means you must be smarter with your money than your civilian counterparts and have a better plan.
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Certified Financial Planner Board of Standards, Inc. owns the certification marks CFP® and CERTIFIED FINANCIAL PLANNER™ in the United States, which it awards to individuals who successfully complete CFP Board's initial and ongoing certification requirements.
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