As promised, we are back with more money and budgeting wedding advice for ya! It’s no secret that weddings cost a pretty penny, (Don’t miss our post last week on the average cost of a DC area wedding!), but where do your wedding budgeting skills go after the big day? The beginning of your new life together is not only the merger of two lives, but also of two financial portfolios. Today, we have Christopher Sikora, a licensed Columbia Maryland-based agent with New York Life Insurance Co., who is no stranger to working with engaged and married couples on their financial needs and goals. We know it isn’t the pretty decor and flowers part of wedding planning that we usually talk about, however taking stock of your finances and starting out right is also a very important part of wedding planning. Take it away, Christopher…
Planning a wedding? Plan the rest of your life as well! You are heavily involved in the planning of the most significant event of your lives. Hopefully, you’ve seen the value in hiring a professional event planner to make sure your wedding is perfect and to protect yourself from unanticipated problems that may arise. Likewise, a financial professional can help design a plan to give you peace of mind and financial security.
Take Inventory + Determine Goals
Sit down and make a list of all the financial assets and obligations you have. Include insurance coverage, life and property. This could be a very revealing conversation! What assets are at risk or subject to taxation? Are you happy with what you’ve discovered? What are your career aspirations? Will that change if children come along? Where do you want to live? Where do you want your kids to go to school? Where do you want to retire, and when? Do you own or plan on starting a business? Make sure these are fully understood by your fiancé.
What would happen if either one of you weren’t there? Would your survivors be able to maintain their lifestyle and stay in your home? Will your survivors still be able to achieve the goals you are dreaming of today? What if you are disabled and unable to work and/or require long term medical care? The level of protection needed will vary over your life, and plans can be customized to account for that.
When you wake up the day after your wedding, imagine how much better you will feel if you have the peace of mind that comes with smart planning! Consult an attorney to create wills, powers of attorney and medical directives. Consult a financial professional to help you set up financial goals.
Financial planning for a lot of people means that if their checking account has a positive balance, then they’re OK. With the commitment of marriage comes responsibility and accountability to the other, and this requires planning. As a financial professional, my wedding gift to you is “four buckets.” I know, that’s not romantic or fun, and they’re not full of money – that’s your responsibility. So how do you fill them up?
- Emergency money: This should be 6-12 months of your income, accessible and in a low risk vehicle, such as a bank account, that won’t charge fees or penalties for you to access it.
- Cash value life insurance: Besides protecting your family, cash value life insurance can be an effective way to save for the future, sheltered from market risk and taxes. And, regardless of your age and health, life insurance is lower cost to you today than it will ever be.
- Qualified money: The term “qualified” means the money may qualify for certain tax advantages, with many restrictions. This includes 401(k) and 403(b) plans at work and individual retirement accounts (IRAs). If your employer matches contributions, take advantage of the free money and immediate return. However, consult a financial professional to determine if additional contributions are financially prudent, given risk factors, limited access to funds, and your current and estimated future tax rates.
- Non-qualified money and everything else: After the first 3 buckets are filling, then the rest can go into other various investments, such as real estate, stocks, mutual funds, starting a business or artwork on the wall. Always consider your purpose for the money, risk tolerance and liquidity. Again, a financial professional can help assess goals and risks to help you choose the right vehicles for your situation.
Thank you for sharing these money saving tips, Christopher! If you’re looking for more guidance from New York Life Insurance for your financial needs, be sure to contact our new favorite life insurance agent, Christopher Sikora!