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Money and marriage: Financial to-dos before saying “I do”

One of the wonderful mysteries of marriage is how two people can learn to live as one. It comes from having a strong foundation of love, mutual respect, and understanding – including an understanding of your new financial life together. For couples just starting out, here are some essential financial tips to consider:

  • Build a financial foundation that matches the life you want to build together - Decide how you’ll handle shared expenses – especially if one spouse has a greater income than the other. Will you split expenses evenly or pay a portion according to each partner’s income? Consider whether to use a joint bank account or keep individual accounts.
  • Check your financial baggage at the door - When it comes to your credit history, full disclosure is a must. A partner’s bad – and unshared – credit history could cause some unpleasant surprises if you decide on a joint credit card or jointly apply for a loan.
  • Build from shared financial goals - Agree on how you’ll approach major goals like buying a home or starting a family. If you have children, discuss starting an RESP to help save for their education.
  • Get it in writing - It’s not at all romantic, but a marriage contract or prenuptial agreement can be important if you want to protect certain assets accumulated prior to your marriage – like a business or family cottage – or to protect assets for children from a previous relationship.
  • Expect the best, but plan for the worst - If something were to happen to either of you, how will you take care of each other? Not a happy thought – but it could happen. Insurance can provide income for your family if you become disabled and unable to work. In the event of your death, life insurance can provide a lump sum to your beneficiaries and can help pay off some or all of a mortgage.
  • Make your life less taxing - Reduce your tax bill by taking advantage of all available deductions and income-splitting opportunities like spousal RRSPs and pension income splitting. Use other tax planning and investment strategies that will deliver immediate and long-term retirement benefits.
  • Where there’s a will, there’s a way - Marriage usually voids all earlier wills (except in Québec) – so update yours. Don’t forget to update your power of attorney.

Be sure your financial foundation is as strong and enduring as your love for each other. Talk to your professional advisor about the plans and strategies that make the most sense for your unique union.

August 31, 2015

This column, written and published by Investors Group Financial Services Inc. (in Québec – a Financial Services Firm), presents general information only and is not a solicitation to buy or sell any investments. Contact your own advisor for specific advice about your circumstances. For more information on this topic please contact your Investors Group Consultant.