Guest post by Brittany Fisher, CPA of financiallywell.info
TL;DR: As Millennials establish themselves in the world and take on the financial burdens of previous generations, it’s time to get financially conscious. While this isn’t a complete list of practical tips, you can address funeral needs, purchase life insurance, combine your auto and health insurance, and assign the power of attorney.
Marriage is a special bond between two people who want to share their love and lives forever. From a financial perspective, this means sharing wealth and income while also shouldering payments and debts together.
After your special day and honeymoon have passed, it’s important to sit down as a married couple and discuss some of the financial decisions you’ll need to make. Many of these choices will make it easier logistically to handle your finances together, and others will help protect you against unforeseen events.
Here are some practical tips for financially conscious newlyweds.
Address Funeral Needs
After celebrating the happiest day of your life, thinking about your own funeral can be a real downer. But preparing for unforeseen and future events is part of being financially responsible. As funeral prices average between $6,000 and $8,000, you can see how being unprepared could put a loved one on the hook for a large sum.
When planning for funeral costs, you need to know the difference between final expense and pre-need insurance. A final expense plan is bought directly from an insurance company, while a pre-need option can be purchased from a single funeral home. You have more options with the final expense option, but it costs more.
Purchase Life Insurance
When you enter into a marriage, you’re agreeing to share the responsibility of many things, including debt, mortgage payments, monthly bills, bank accounts, and children (if you decide to have kids). If an unexpected event or accident were to occur, leaving one spouse alone with these obligations, it would be a major challenge. Investing in life insurance can help alleviate some of this potential burden in the event of spousal loss.
It’s recommended that couples get separate life insurance plans so the other is protected in case of an emergency. This is very important for couples who already have or are planning to have children soon. Still, you can opt for a limited 10- or 15-year plan if you prefer to adjust your policies when circumstances change.
Combine Your Auto and Health Insurance
Insurance policies are another expense that you and your spouse can combine to get better rates and make it easier to manage overall. If you recently tied the knot, you both probably still have separate health and car insurance policies.
According to a study from InsuranceQuotes.com, a married individual could pay less for their car insurance than a single counterpart of the exact same age. When it comes to health insurance, premiums may be cheaper if couples are claiming the same services. The out-of-pocket limit you have to pay before the insurance kicks in will also be reduced to one rate rather than two for individual policies.
Assign the Power of Attorney
Assigning power of attorney is just a fancy way to describe giving someone the legal ability to make decisions on your behalf. Couples typically share the power of attorney for each other just in case one were to become incapacitated for any reason.
Legally, this ensures that you would be able to handle financial assets in your spouse’s name (and vice versa) in the event of an emergency. Without this provision, you or your spouse may not be able to handle assets that impact your life but aren’t in your name. When assigning power of attorney, don’t forget that both individuals need to assign it to their spouse.
As a newlywed, you’re just starting to see what it’s like to intertwine your life with another person. Setting up your shared finances for success from the very beginning can help make sure things run smoothly later down the road.
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