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Tags: financially | ready | get | married

Are You Financially Ready to Get Married?

fingers dressed as married bride and groom amid dollar background

By    |   Friday, 29 March 2019 08:40 AM EDT

With student loan debt and low savings being so common among Americans, it's even more important for couples to consider their financial situation before getting married.

More people are holding off on marriage, waiting until a median age of 27 for women and 29 for men, according to the Pew Research Center.

Like buying your first home, getting married is a major milestone with some serious financial implications. While getting married is incredibly exciting and finances might not be the first thing on your mind, it is important to consider how your finances might be impacted.

From taking on joint debt to dealing with whether to combine accounts, here are a few major financial considerations you should address before tying the knot.

New Tax Implications

Once you get married, you have the option to either file your taxes jointly or separately. In some cases, combining your and your partner's joint income can push you into a higher tax bracket, meaning you'll have to pay more in taxes. However, in other instances, the tax deductions and credits that are offered to couples who file jointly may result in less taxes than when you were single.

Married couples are also allowed to give each other gifts without having to pay any taxes on them. Also, whereas single individuals are only granted $250,000 in tax-free profit when they sell a property, married couples are eligible to receive $500,000 in tax-free profit.

These are just a few of the tax implications of filing as a married couple. In order to be sure you understand all of the potential advantages and disadvantages of filing as a couple, you should consult with a tax adviser or CPA before filing.

Existing Debts

Before getting married, it's important that you and your partner each understand your combined financial situation. This includes discussing student loans, credit cards, personal loans and any other type of debt.

In some cases, individual debts become joint debts once married, meaning you could be responsible for your partner's debts. As such, it might be helpful to know if your partner has a six-figure student loan so you may allocate your resources accordingly.

You should take time to create a plan with your partner to pay off debt. Whether you want to tackle the debt separately or together, consider options such as the snowball method, the avalanche method and consolidation to speed up the process of paying off your loans or credit cards.

Do You Plan on Having Children?

If you and your partner plan on having children, you need to consider whether you are financially prepared to do so.

According to a 2015 report by the U.S. Department of Agriculture, a middle-class family with two married parents and two children could expect to spend approximately $12,980 per child per year. Or, to paint the long-term picture, a married couple with an annual income in the range of $59,200 to $107,400 could expect to spend $233,610 to raise a child through 17. This number does not even take college expenses into account.

If raising a child is an expected part of your and your partner's future, you need to discuss how you plan to budget for the expenses you will incur.

Creating a Joint Budget

An important aspect of maintaining financial stability once married is creating a joint budget that both you and your partner can follow. This is often difficult for a number of reasons.

One major obstacle is that one or both partners often have poor spending habits, which makes it difficult to stick to your preplanned budget and achieve your joint financial goals.

In other cases, individuals feel entitled to their own money and view creating a joint budget as unfair, particularly if one partner earns more than the other. However, both of these issues need to be resolved in order to eventually achieve your savings and retirement goals.

Calculate each of your incomes and determine how much each of you will contribute to your monthly expenses. Will you both contribute an equal amount, or will it depend on who earns more?

Answer these questions before getting married to ensure you and your partner are both comfortable with your joint budget.

Combining Your Assets

Combining your financial life with your partner's can be exciting, as it often feels like it further cements your long-term commitment to each other. However, it can also be a scary or uncomfortable process.

Should you combine all of your finances or maintain completely independent accounts?

Some couples feel uncomfortable with only having joint accounts. Instead, you might choose to open a joint account dedicated to paying bills or joint savings while still holding separate accounts. Some couples might prefer total independence and opt to keep only separate accounts.

You should also discuss any major assets that either of you owns, such as property or vehicles, and what you'll do with assets you acquire together in the case of a divorce. This can be an uncomfortable conversation to have, but divorces do happen, so you should be prepared to split your finances if you ever decide to part ways.

Getting married is exciting. However, like many of life's major events, marriage can have a significant impact on your financial well-being. As such, you should take the above factors into consideration before marrying your partner.

Joe Resendiz is a Research Analyst at ValuePenguin, where he focuses on personal finance and credit research to assist consumers. Previously, Joe specialized on public sector and infrastructure financing at Goldman Sachs. He graduated from the University of Texas at Austin with a BBA in Finance.

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More people are holding off on marriage, waiting until a median age of 27 for women and 29 for men, according to the Pew Research Center.
financially, ready, get, married
Friday, 29 March 2019 08:40 AM
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