Planning for a wedding is a demonstration of commitment: it requires setting a goal, putting together a timeline and schedule, and typically involves some compromise from both partners. That experience is a great foundation for the happy couple’s next big task: combining any previous arrangements and developing a new financial plan for a firm footing as they focus on a future together.
Alim Dhanji, a Certified Financial Planner® professional with Assante Wealth Management in Vancouver, British Columbia, believes that understanding each other’s finances and establishing shared goals is best accomplished when times are good – soon after the wedding.
Alim says people from diverse backgrounds and cultures often think differently about money too. A CFP® professional will note each person’s financial situation and any existing financial plans and see how they can be consolidated into one plan with common goals.
“It’s best to get on the same track as quickly as possible so that we can develop strategies to efficiently manage their finances,” he says.
Jeanette Brox, a CFP professional at Investors Group in Toronto, Ontario, says reports indicate many marriages fail for financial reasons, so it’s important for couples to discuss their finances and form a united team as quickly as possible.
“This is a union and two people have come together to have a good life—to do that they need a combined approach,” says Jeanette.
That approach needs to consider all the different aspects of a financial plan such as cash management, tax planning, investment and retirement planning, insurance, risk management and estate planning.
Jeanette says a consolidated financial plan enables the couple to make the most of what they have. For example, a younger couple may have unused tax credits from their tuition.
“It’s a combined effort to structure their financial wellness.”
Alim agrees and says establishing a common goal, such as buying a home or starting a family, can quickly align a couple’s financial views and set the course for their financial future.
“The sooner a couple sees a planner, the more successful they will be,” he says, adding that their first meeting with a CFP professional is a positive experience.
“They’re recently married and it’s a good time to be talking about their future together and how they can achieve their goals. We get their goals written down, we know where their assets are and can plan efficiently to make the most of them. Once there is a plan on paper and they have the direction, it’s achievable,” he says.
But just like a diet or an exercise program, if you don’t see the benefits, it’s not sustainable, says Jeanette, who believes it’s unrealistic to “save every cent.” She advises including short-, medium-, and long-term goals to stay motivated. While buying a house may be a medium-term goal, saving for vacations or bucket-list experiences are also important, she says.
“There needs to be some flexibility.”
Jeanette and Alim both agree that it’s important for couples to have no financial secrets from each other and for each partner to maintain their own credit rating.
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