Taking charge: A woman’s guide to finance
8 things to do before you say I do
As you prepare for your walk down the aisle, here are a few
steps you can take to help you and your partner lead a financially
healthy lifestyle.
1. Start talking (and keep talking).
Before you enter into a spousal agreement, talk about salaries, savings and debts.
Research has shown that women remain significantly behind men with respect to basic money
management skills. A recent study showed that only 63% of women, compared with 80% of men,
have a handle on their cash flow. That same study found that fewer women than men regularly pay
off their credit card balances in full (49% vs. 65%), or have an emergency fund to pay bills if they
lose their jobs (46% vs. 61%)1.
Most financial planners advise couples to routinely discuss financial priorities and spending habits.
Create a budget to help you get started and decide how you’re going to share expenses, establish
an emergency fund and save for retirement, among other long-term goals. Prioritize your spending
choices; decide who will pay the bills and handle investments and make it a point to check in with
each other regularly — maybe once a month — to see if you have to make adjustments.
Your financial well-being – just like your relationship – is a partnership, so both parties should play
a role in the decision-making process. If you haven’t been involved before, now is the time to get
started.
2. Make sure you see eye-to-eye about financial goals.
It’s important to sit down and decide what your financial goals are, and how and when you hope to
achieve them. Set them according to what you want in the short term (within a year), intermediate
term (one to five years) and long term (more than five years). You can then put money away according to the schedule you’ve developed.
Thinking of having children? They come at a cost! Will you want to enroll them in public or private
school? Tuition can be a significant and long-term financial commitment.
What if you want to be a stay-at-home mom (or continue to be one?) That’s great news for you and
your children, but it too comes at a cost. Can you achieve your long-term financial goals with only
one income?
Now is the time to discuss these types of situations with your husband or partner, so you can start
planning for whatever path you choose.
You may also want to
consider filing your
taxes jointly (if this
is an option for you).
If you don’t, you’ll
lose some major tax
benefits.
3. Decide how you’ll combine your savings and assets.
There’s no one right way to combine your accounts; it simply depends on your situation and what
makes you comfortable. You can organize your finances several different ways:
Pool everything together: One person pays the bills from a joint account. If this is your first marriage, it is possible you both have more debt than savings, and assets are not yet in the picture.
Since you are starting from scratch, it may make sense to combine everything.
Keep everything separate and assign each person specific bills to pay: For example, one person
might pay the mortgage, and then the other pays the utilities and groceries. Then you both pay
down your own student loans, buy your own gas, clothes, and pay credit card bills.
Three accounts. You each have your own accounts for your bills and expenses, but you contribute a
percentage into one household account to pay for shared items, such as your mortgage and utilities. For example, say you make $40,000 a year and your spouse makes $60,000. You pay 40% of
the household bills, and your spouse pays 60%.
Every relationship is different. Based on how you decide to organize your accounts, you may still
choose to keep a separate sum of money that is yours only. In the event of an emergency, or if you
and your partner decide to part ways, you could find yourself needing extra savings to pay for items
you previously split (such as rent and other monthly bills).
Also, be sure you understand state laws governing “marital assets” as many states do not provide
for truly separate marital assets in the absence of a prenuptial agreement.
Studies have shown
that women are less
confident than men
when it comes to
investing, as 25%
of women, vs. 42%
of men say they are
confident that their
investments are
allocated properly,
and 64% of women
vs. 84% of men say
they have a general
knowledge of stocks,
bonds and mutual
funds.1
4. Start saving and investing early.
Saving even a little bit can make a world of difference. But, it can be tough to save when much of
your income is going toward paying credit card bills (both yours and perhaps that of your spouse or
partner), student loans and other monthly expenses.
Learning how to manage the debt you have while still being able to save for things like retirement
and other long-term goals is a critical part of your overall financial health. While saving may seem
difficult, it is important you at least consider taking a set percentage out of your paycheck each
month and depositing it into a retirement account.
If you do that first, you’ll likely never miss those extra dollars. On a positive note, that money will
make more money, and your savings will grow. One good way to set aside money is through your
employer’s retirement savings plan, such as a 401(k) or 403(b), if it’s offered.
A little can go a long way. If you’re unsure about how to get started, contact your human resources
representative or speak with a financial advisor, and he or she can help you determine which retirement plans may be best suited for your current savings plan and budget.
You may also want to consider the use of online tools (like those offered at Hello Wallet, which offers both advice and savings calculators over the Internet). These resources can be instrumental in
not only helping you reach your goals, but sticking to your plan and making adjustments along the
way to account for life’s milestones (such as buying a home or paying for a college education).
5. Realize that rainy days do happen.
An emergency savings account is a critical part of anyone’s financial health – whether you are single
or in a relationship. You may have to tap into it in cases such as unemployment, medical expenses
– even a leaky roof. As best as you can, put away at least six months’ worth of living expenses.
The best place to keep a rainy-day fund is in an account where your money will be safe and liquid
(easy to get to quickly), like a money market account at a bank. If and when you withdraw money
from your rainy-day fund, try to restore the balance quickly so you’ll have enough cash available for
later use if needed.
6. Protect each other.
Purchasing life insurance can enable you and your spouse to weather any financial hardship in
the case of a spouse’s death. Life insurance provides a tax-free lump sum to your survivors in
the event of your death. While your employer may offer a specific rate for life insurance, it is also
recommended that both you and your spouse or partner each own at least 10 times your annual
salaries in protection (in addition to whatever amount your employer may be offering). However, the
appropriate amount of insurance for you depends on your needs and personal circumstances.
7. Decide if you need a prenup.
If you’re coming into a marriage where neither of you has any serious money, debt or assets, there
might not be any reason to get a prenuptial agreement. But if one of you has a lot of money or
major debts, stands to inherit a fortune or has children from previous marriages, it might be worth
it. You’ll both need to consult lawyers if you decide to get one.
Investors with lower
confidence levels
tend to invest overconservatively out of
fear of losing their
principal — so it’s
important that if you
don’t feel confident
in your financial
know-how, you seek
out the advice you
need to help you
get started.1
8. Talk to someone who knows.
Finances are not easy to understand – and you shouldn’t be embarrassed to ask for help. An
experienced, certified financial advisor can help you and your spouse feel more comfortable in
planning your future together. She or he can help you navigate the various savings and investment
accounts available to you.
It’s important to choose an advisor who is either a Registered Representative (RR) working for
a brokerage company licensed by the Securities and Exchange Commission or a Registered
Investment Advisor (RIA). An RIA must adhere to a fiduciary standard of care, meaning he or she
is required by law to look out for your best interests and is legally held to a higher standard of care
than a brokerage representative.
The advisor you choose may also be accredited by one or more of the standard professional
organizations. The most common credentials are Personal Financial Specialist (PFS), Certified
Financial Planner™ (CFP®), Chartered Financial Consultant® (ChFC®), Chartered Financial Analyst®
(CFA®) and Master of Science in Financial Services (MSFS).
Make sure that you know which services you’ll be getting and how much it will cost. Financial
planners typically fall into three categories based on fee structure, so it will be important to choose
the one that you are most comfortable with.
The road ahead
While this list of tips is by no means comprehensive, following and revisiting it regularly can help
you and your spouse achieve your financial goals. Staying active in your household finances is of
utmost importance for both parties involved.
It’s never too late to improve your financial health. By partnering with your spouse or partner, you
will be one step closer to finding peace of mind when it comes to your financial well-being. And you can get back to planning your upcoming nuptials!
Need more information?
Visit tiaa-cref.org for broader Financial Education, including a variety of
resources to help you improve your financial well-being.
Financial Finesse, 2011, Gender Gap in Financial Literacy
1
While it is not our purpose or intent to provide specific investment advice or financial planning services, the above information may be helpful in understanding financial issues relating to marriage. We urge you to seek advice based on your own particular circumstances from a financial advisor.
The tax information contained herein is not intended to be used, and cannot be used by any taxpayer, for the purpose of avoiding tax penalties
that may be imposed on the taxpayer. Taxpayers should seek advice based on their own particular circumstances from an independent tax
advisor.
The material is for informational purposes only and should not be regarded as a recommendation or an offer to buy or sell any product or
service to which this information may relate. Certain products and services may not be available to all entities or persons.
TIAA-CREF Individual & Institutional Services, LLC and Teachers Personal Investors Services, Inc., distribute securities products.
© 2011 Teachers Insurance and Annuity Association-College Retirement Equities Fund, 730 Third Avenue, New York, NY. 10017
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