By Jon Bacon, CFP®

Personal finances are one of those things that we grow up not talking about because it can feel tacky, uncomfortable, confusing, or all of the above. However, once you are married, it’s essential that you and your spouse get on the same page about money. This is not an overnight process, but you have plenty of time to work out all the details and develop a system that works for you both.

First, lay all your cards on the table.

It’s important that you both understand each other’s full financial picture: How much do you have saved? How much do you owe? What do you own? We recommend you create a balance sheet listing all of your assets (stuff you own) and liabilities (stuff you owe). You can list all your bank and brokerage account balances, 401(k)s, retirement plans, investments, real estate, etc. Update your balance sheet once or twice a year to track your progress; your net worth will be growing if things are working correctly.

Start planning.

Once you have an idea of where you are currently, you can start talking about where you want to go. The purpose of money is to fund a happy and secure life. Financial planning is the process of taking inventory of your finances and harnessing your energy and resources toward accomplishing your family’s specific goals.

Set goals.

Goal setting is the foundational piece for any successful financial plan. At the end of the day, money is just a tool to help you build your ideal life. In this context, goals should be specific and include three things: purpose, amount, and time frame.

Here is an example:

  • Incomplete goal: “I want to save money for college.
  • ”Complete goal: “I want to save $100,000 for my daughter’s college by the year 2038 when she is eighteen.”

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Prioritize common goals.

Your goals will change over time, but the important thing is to use the goals-based framework to orient yourself and establish your priorities. Here are some common goals that you will probably want to incorporate:

Emergency Fund: In case one of you loses your job, maintain six months of nondiscretionary spending (mortgage, insurance, essential food, utilities, etc.) in a savings account or money market mutual fund. Having a cash cushion helps avoid paying for emergency expenses on a high-interest credit card.

Protection: Protect yourself from low-frequency but high-impact events. To ensure you are not without a paycheck in the event of an accident or illness, you should look into long-term disability insurance. Also consider buying some term life insurance (twenty to thirty years); if one spouse were to pass away, the other spouse would be saddled with paying the mortgage, college, and everything else.

Save for Retirement: Retirement may seem far away, but the earlier you start saving, the better off you will be due to compounding interest. The money that you save today will have another thirty years or so to grow before you need to start using it, whereas the money saved later in life won’t have as much time to compound. A good rule of thumb is to save 10 to 15% of your income and increase that amount as you get raises down the line.

Getting your finances in order as a married couple is a process that requires work and open communication. You and your spouse will both bring your own values, priorities, and preconceived notions to the conversation; be prepared to listen and work collaboratively because the stakes are high. The good news is that you have a partner who is equally invested in your common success.