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Marriage is a Financial Union

I had the opportunity to be a sponsor at the bridal show held in Parksville last month; there was a large turnout and the excitement was palpable. It is important to have all of your wedding details planned to ensure the special day goes on without a hitch and since marriage is a financial union as well as a loving partnership here are a few financial planning subjects that every couple, newlyweds or not, should consider to plan for a successful financial future together.

It is important to know where you each stand financially; are you a saver or spender? Do you like to pay cash or charge it? Will you set up joint or individual bank accounts? – whichever you decide, compare various institutions’ bank accounts; you are able to earn up to 3.25% on chequing or savings accounts and transfer between banks at no charge.

Will you be consolidating your investment accounts, or will you each continue to deal on your own or with your own financial advisor. It doesn’t matter which way you decide to proceed, but it is important to understand the objective of each investor and the goal of the portfolios.

If one spouse is responsible for all of the finances it is important for joint discussions regarding risk levels, the amount of savings that you want to set aside for a major purchase such as a house or a car, education savings plans for your children. If you are planning to purchase a house in the future, take the opportunity to get a preapproval; that way you will know how much you have to save for a down payment or how much of your income you will have to budget for your house payments and related expenses.

If you have no credit or bruised credit take this time to find out what steps you should take now so that you will be able to purchase a home when you are ready. You will have to write new wills and have discussions around insurance needs; especially if you have children, what will happen if one of your incomes is no longer coming in. The mundane task of monthly bill paying will have to be addressed.

Will both paychecks go into one account, will one spouse pay for certain expenses. Whose income should be used for bill payments and whose for investing—a rule of thumb is that the higher income earner pays the bills and the lower income earner invests. There are tax benefits to this as well as possibly future income splitting, but individual circumstances vary and should be discussed with your advisor.

Financial planning involves your overall picture, and whether you choose to jointly monitor your plan or have one look after its course it is important that both of your preferences are acknowledged and addressed. A union is as strong as the sum of all its parts and a sound financial plan will help to cement your successful future life together.

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