BrilliantWithMoney

Getting married (or entering into a Civil Partnership) is one of those life events that should trigger a thorough review of your personal finances. Bringing together two sets of assets, incomes, liabilities and, most importantly, attitudes towards money can be a challenging experience.

With the wedding season in full swing, now is a great time to be thinking about the financial aspects of marriage. From opening a joint bank account to thinking about your life assurance, here are the five financial steps you need to consider before you walk down the aisle.

1 – Put everything on the table

Complete and open disclosure about the state of your personal finances, including your debts, is essential before you tie the knot. Rather than assuming your other half knows everything about your money matters, schedule some quality time to bring everything together and review it all.

Sharing your financial details before getting married will prevent any nasty surprises at a later date. Look at things together in four main areas – assets (the things you own), liabilities (what you owe), income and expenditure. Assets and liabilities are the most important, as you will both share ownership of these after the big day.

2 – Understand your new responsibilities

Getting married creates an important financial responsibility to your new husband or wife. It is important to consider these responsibilities and make sure you are adequately protected from a financial perspective.

This step involves making sure there is sufficient life assurance cover in place should one of you die unexpectedly. A good general rule of thumb is to have enough cover to repay all of your debts and produce enough money to support your family after you have gone. If you have, or you are planning to have, children together then this becomes especially important.

You should also both consider re-writing your wills, or getting a will in the first place if you do not already have one in place. It always makes sense to review your will every time a significant event takes place in your life. Getting married is definitely a significant event!

Marriage is also the right time to ensure that any beneficiaries nominated for the benefits from any existing life assurance or pension plans remain up to date. The person or people you nominated to receive these benefits before you got married might be very different to the name you choose to put on the paperwork afterwards.

3 – Agree on your spending priorities and financial goals

When you enter into a lasting relationship, it is important to have shared financial goals. This is particularly the case if you are planning to share income. Agreeing on how you are going to spend your shared income and what your financial goals together in the future look like is essential.

Two different people might be compatible in every other sense, apart from their financial goals. Spending some time understanding this before you get married is a good way to avoid arguments somewhere down the line. You might agree to disagree on this point, but at least it will not come as a big surprise when the two of you want to spend money on different things.

Do not automatically assume that you must both use a joint bank account for all of your household finances. It is becoming increasingly common for both parties to a marriage to retain their sole accounts, maybe opening a joint account to handle joint expenditure only. Do what works best for you and not what you think others expect.

Thinking longer term, you need to agree on how you invest money for the future. Financial objectives like retirement planning need a concise strategy including how you allocate any spare money each month. If you have different levels of earnings, it might be worth funding the pension of the higher earner to benefit from the maximum level of income tax relief. Think in terms of your total household income and your pensions as a shared asset for your future financial security.

4 – Consider a pre-nuptial agreement

Whilst it isn’t particularly romantic to think about the end of a marriage before it starts, it does make sense to consider the possible financial consequences of divorce, particularly if you bring a greater level of wealth or business assets to the relationship.

Pre-nuptial agreements are formal agreements setting out the intentions of both parties should they get divorced in the future. They are not yet legally binding in the UK to the same extent they are in many other countries, but they can make the financial aspects of any subsequent divorce proceedings less stressful.

5 – Make time for money

Dealing with your finances as a result of marriage is not a one-off event, never to be repeated. It is good practice to schedule some time each and every month to work through your household finances together.

Resist the temptation to delegate responsibility for financial management to one partner. It is unfair to place all of this work on one person and it can be damaging to your relationship in the long term if one spouse feels out of control when it comes to their money.

A regular review of your budget each month should take place in addition to a more formal financial review at least annually. This is also a good time for both of you to meet with your Financial Planner to update your documented financial plan and check the progress you are making towards longer term financial goals. An ad-hoc financial review might be required should other significant life events occur during your marriage, such as the arrival of children to your family.

Martin Bamford is site editor of BrilliantWithMoney and a Chartered Financial Planner at Informed Choice.