ROANOKE TIMES
Copyright (c) 1996, Roanoke Times
DATE: Monday, June 3, 1996 TAG: 9606040017
SECTION: MONEY PAGE: 6 EDITION: METRO
SOURCE: MAG POFF/STAFF WRITER
PLENTY of planning goes into the perfect wedding. Better that some of that effort be directed at creating the financial partnership that helps make a lasting marriage.
Marriage means learning to handle money with another person in mind. A marriage can be clouded by conflict if, for example, a free-spender joins a saver.
"Hopefully, they talk about this before they get married," said Connie Kratzer, specialist in family financial management for the Cooperative Extension division at Virginia Tech in Blacksburg.
She cited as an example of "going a little bit too far" a recent national magazine's story about a couple who signed an elaborate pre-nuptial agreement that even specified the type of gasoline going into the family cars.
But she said the pre-wedding discussions should cover an honest assessment of each partner's financial position, preparation of a budget, agreement on expenses and a plan for saving.
Action is required as soon as the newlyweds return from the honeymoon, Kratzer said.
Is the woman changing her name at the marriage ceremony?
Is so, Kratzer said, the first thing she should do after the honeymoon is notify the Social Security Administration so its records reflect her new name. Then all income records, such as those at work and at the bank, must be altered accordingly.
The new name should also be recorded on all bank accounts, credit cards and other records, Kratzer said.
Are you going to have joint bank accounts or two separate accounts?
There is no right answer, but Kratzer suggested that newlyweds who keep separate accounts consider listing each other as co-owners of those accounts. If anything happens to one of them, she explained, the survivor would have access to the money.
You may or may not want to grant your spouse permission to charge on your bank credit cards or store accounts. But, Kratzer said, it's important for a woman to have some credit listed in her own name. That means at least one card should be in her name, even if her husband has the right to charge against the card.
The next step, Kratzer said, is to change the beneficiaries of life insurance policies and of 401(k) and similar retirement plans at work. And don't forget your individual retirement account.
If you have any assets, she said, ask yourself who would inherit the asset if you die. That will not change automatically just because you got married, Kratzer noted, so you have to take a specific action to protect your spouse in such cases.
Most people think they don't need a will, Kratzer said, but "everybody should have one." That is especially true, she added, if one or both spouses come to the marriage with property or children from a previous marriage.
Kratzer sees no problem with keeping cars titled in your own names, but she said you can probably save money by putting them under the same insurance policy. Read your policies and cover the cars under the best one.
You will also need to combine, or buy, homeowner or renter insurance.
Also take a look at your health insurance.
If each of you has health coverage at work, you may want to keep your own insurance because your separate employers probably pay the full cost. On the other hand, she said, one policy may be far superior to the other. If so, you may want to cover both partners under the better policy.
Kratzer suggested setting an annual time, either your wedding anniversary or the first of the year, to review your finances and set new goals.
The Virginia Society of Certified Public Accountants said it's common for young couples to have large debt, including school loans, credit card balances and automobile loans.
If you have significant debt, particularly consumer debt with high interest rates, you'll need a strategy for paying it off.
Eliminating debt and avoiding high interest rates offer a better payback than almost any investment, the CPAs said. These are "the only sure-fire ways to put you and your spouse on sound financial footing."
Most newlyweds are reluctant to do it, the CPAs noted, but those with a lot of credit card debt should consider using some of their cash wedding gifts to knock it down.
Another option is to consolidate your debt to one low-interest credit card. Even if a card offers a low rate for a limited period time, such as six months, you may be able to save significant amounts in interest and pay off your debt faster.
Finally consider where you will put your savings.
The younger you are, the more you can afford to invest your savings in stocks and bonds, which tend to offer high yields over the long term.
Remember, too, that it's never too soon to save for retirement. If possible, take advantage of company-sponsored 401(k) plans, individual retirement accounts and other retirement savings vehicles. The more you save now, the more your money will grow through the compounding of interest until the time you retire.
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