New life events bring change, and milestones like getting married – or getting divorced – can have implications in many areas, including your financial accounts and banking relationships. As you update your “status” and begin this new exciting chapter, here are four factors to examine to make sure you’re off to the best financial start.
Determine your savings. One of the first and easiest things to consider after a new life event is your ability and need to save for a rainy day. If you’ve just gotten married, your ability to save may be doubled as you get used to a joint income and are able to consolidate payments. That said, do you have the right savings vehicles?
Savings accounts are the go-to option, but most banks offer other investment opportunities that can make your savings work harder. High-yield bank accounts offer a higher interest rate than traditional savings accounts and often are available if you have other accounts at the same bank. Another option is a CD or Certificate of Deposit. CDs let you take advantage of higher rates, as long as you keep your money in the account for a specified amount of time, which is typically six months, one year, or five years. Other savings vehicles include:
- Money Market Funds, which are mutual funds that only invest in low-risk securities
- Money Market Deposit Accounts, which are like CDs in that they are FDIC-insured, but they have lower rates and more accessible cash
- Treasury Bill and Notes are backed by the US Government and are sold at a discounted rate to achieve their full worth after they reach maturity
- Bonds, which pay you interest along with the face value of the bond after a specific period.
Getting married is an ideal time to research these products and maximize your ability to save.
Cover your bases. Another thing to do after a major life event is to assess your financial practices. If you’re getting married, spend some time thinking about how you’ll handle your finances. Will you keep your current checking and savings accounts, or open joint ones with your partner? Many couples choose to maintain their own accounts and create additional ones together for shared expenses.
If your life event involves divorce or ending of a long-term relationship in which you’ve shared finances, it’s also time to take stock. You may have joint accounts that need to be closed or signed over to you or your ex, which may involve visiting the bank together. And if you don’t already have a checking account or savings account, you’ll want to open one in your own name.
Another tip is to review your accounts and make sure you aren’t co-signing on loans you are no longer responsible for. At the same time, look at any life insurance policies or saving accounts that list beneficiaries and make changes if needed.
Evaluate credit. At every stage of your life – and whether you’re getting married or divorced – it’s imperative to have a good handle on your credit. If you’re entering a marriage, talk with your partner about credit scores, debt and what comingling finances will do to your own credit standing and financial status. If you apply for joint credit together, make sure you’re both in a position to make regular payments.
For those considering and getting a divorce, ask for your credit score. You may find that you do not have enough credit as an individual, or that debt incurred throughout the marriage has affected your personal rating. If your score is low, take steps to improve it by paying down or refinancing debt. If you don’t have established credit, consider applying for a bank credit card to start building your credit identity.
Rethink retirement. Lastly, a final thing to look at as you approach a new life event is retirement. If you’re getting married, it’s never too early to talk to your partner about your hopes and dreams after you retire. And with double income and consolidated expenses, you may be in a better position than ever to make those hopes and dreams a reality. If you’re newly divorced, it’s also a time to envision a new retirement you hadn’t thought of before. Whether you’re married or single, take stock of your investments and create a strategy based on your new set of circumstances.
As you start this new chapter and update your “status,” make sure the changes in your life leave you in the best possible position. For more information about the products and services that can make your transition easier, contact us.
