If you're planning on getting married, before you even think about saying "I do," you better start thinking about due diligence. When two companies announce a corporate merger, the event is often likened to a marriage between two people. And just as two merging companies conduct fiduciary due diligence in preparation of the union, so too must couples as they prepare a lifetime together. OK, so maybe you won't find that kind of marital advice in a Lord Byron love poem, but if you don't think being financially responsible is one of the most important aspects of a happy marriage, think again. According to The Heart/Credit Connection, a 2006 study conducted by Opinion Research and Fair Isaac ( FIC), a lack of financial responsibility is a greater cause of martial stress than infidelity. So to make sure your love union doesn't become the next AOL-Time Warner or Quaker Oats-Snapple, here are five financial planning tips for newlyweds:
Armstrong says that many couples are reluctant to talk about finances, and a difference in attitude can be a source of tension down the road. He's found that when it comes to money, opposites often should not attract. "The spendthrift and the saver usually don't get along," he says. "Too often marriages have ended because each party has a different idea about what money is for and how to handle it."
Armstrong also says it's a good time to update your will and to get a power of attorney and health care proxy as well. He cites the famous Terry Schiavo case, where the spouse and parents of a comatose woman endured a brutal court battle in 2005 over her medical fate. "You have to choose who is going to make decisions for you -- your spouse or your parents," he says. "No one wants to think it can happen to them, but it does happen, and it's not a bad idea to get the documents taken care of right away."
"You need to decide if you are going to have separate or joint accounts and how you are going to manage the checkbooks in these accounts," Armstrong says. "If you decide to have a joint account, make sure everyone knows what's going in and out to avoid overdraft problems." One area couples should strongly consider combining, he says, is insurance. If both spouses have insurance through their employers, they should compare who has the better benefits and go with that one. But one thing no couple likes to discuss before marriage is the grim reality of the 50% divorce rate in the U.S. Because half of all marriages fail, it's important to keep this in mind and have some assets set aside for yourself should you find yourself on your own again.