Five financial must-do’s before the big ‘I do’

Wedding season is upon us and while love is in the air, it’s important to make sure any wedding checklist has couples covered on more than just the big day.

Before they tie the knot, couples need to address how compatible they are on longer-term and critical lifetime issues, including money and finance. Money is often cited as one of the leading causes of stress in marriage so it pays, in more ways than one, to know the kind of financial marriage you may be getting into with your soon-to-be spouse.

  1. “MY” vs. “OUR” money: Will we have joint or separate accounts? Will we consolidate accounts with the same banking partner?

Ideally, all assets should be viewed as “ours” not just “mine.” That requires honest and open communication on the part of both parties. It is critical that P = I in discussions (Perception = Intention). The perception of the listener must be the same as the intention of the speaker. When P = I you have conformity but when P does not equal I, you have conflict.

  1. Debt: How much debt am I bringing to the marriage, and how will WE manage it?

Debt is the great American issue that must be dealt with and eliminated. That requires adherence to a well-organized budget.

  1. Budget: Who’s in charge of budgeting and paying the bills? Is there a CFO of the house, or is it a partnership?

Who serves as the family CFO is based upon who has the desire and the skill set to manage the family finances, including bill payments. The other partner needs to be kept abreast of financial activities but does not need to be the one managing the budget.

  1. Spending: Are our spending priorities in line? Is there mutual or individual approval for spending?

It is vital that the couple agree upon the difference between needs, wants and desires, especially when children are on the scene. Families are to provide needs not necessarily wants or desires.

Understanding the five principles of meaningful money management— earning, saving, giving, budgeting and spending— form the basis of a well-managed household.

  1. The Future: Are we prepared to plan for retirement together? (e.g. 401(k) plans, Roth IRA, etc.)

Proper planning prevents poor performance is the axiom that must guide the family financial forum. Information before hand is a reason and information afterwards is an excuse. No one likes excuses, especially in family financial relationships. The degree to which a couple plans their finances and communicates the management of that plan to one another will play a major role in the solidarity of their relationship.

Bottom line— Open and honest communication is the factor that will most determine success or failure in any relationship, but certainly is crucial when dealing in family finances.

Joseph Jennings, CFA, Senior Vice President and Investment Director, PNC Wealth Management has 18 years of wealth management experience and received his MBA in Finance from Loyola University. He is a Chartered Financial Analyst (CFA) charter holder and member of both the CFA Institute and the Baltimore CFA Society. He can be reached at

Financial tips for the New Year

The New Year offers a fresh start, when many of us feel energized, optimistic and open to change. When you set your New Year’s resolutions, consider financial goals too. Set goals that are attainable and measurable. Break each goal into steps, write those steps down, and set deadlines for accomplishing each step. Here are a few suggestions to get you started:

  1. Pay yourself first. Set a savings goal. You can start with three to five percent of your pay and work up to 10 percent. Set up automatic deposits into a separate account. If your employer offers a 401(k) plan, try to at least contribute up to the match. If your employer doesn’t offer a 401(k), set up an IRA. If you are already contributing to your 401(k) or IRA, consider increasing your contributions to the maximum. In 2014 the maximum amount for a 401(k) is $17,500 and if you are at least 50 you may contribute up to $5,500 more.
  2. Create a budget. This is not as hard as it sounds. If you use your bank’s on-line bill pay, a good place to start is the summary information found right on the website. Your credit card company may also provide you a year-end summary of your spending. You can’t set goals for spending and saving without understanding where your money is currently going. As you look at your spending, think about what you are spending your hard-earned money on— differentiate between wants and needs. Much of our overspending is on little things like a daily latte or eating lunch out every day. Cutting back on these seemingly minor expenditures can have a big impact on your finances.
  3. Pay off credit card debt. This is likely the highest interest rate debt you have. If you have only been paying the minimum, set a goal to pay a certain amount more each month. And through creating a budget and setting savings goals, you should be able to find ways to reduce spending on the “wants” and reduce your use of credit cards. Your ultimate goal should be to charge no more than you can pay off each month.
  4. Prepare a personal net worth statement. This is simply a list of all your assets (home, 401(k) plan, IRAs, bank accounts, life insurance, etc.) and your liabilities (mortgage, auto loans, credit card debt, etc.) Many people are surprised to discover how this simple exercise helps you focus on financial goals.
  5. Review your estate planning documents. Documents that everyone needs include a will, durable power of attorney, medical power of attorney, directive to physicians (living will), and a HIPPA (medical privacy) release. If you have minor children, a will is necessary for naming a guardian in the event you die. The importance of these documents cannot be overemphasized. And review with your closest family members so they know where the documents are in case they are needed in an emergency.
  6. Rebalance your investment portfolio. The asset allocation in your investment portfolio is a road map towards your financial future and should be aligned with your financial goals. Throughout the past year certain asset classes may have performed better than others and your portfolio should be rebalanced back to your target allocation. A financial planner can help you envision your future, determine your financial goals, and devise a strategy for achieving those goals including an appropriate asset allocation.
  7. Review your insurance. Life insurance policies should be reviewed annually to see if they still meet your needs. Similarly review your property and casualty coverage. Depending on your situation, consider an umbrella policy. You should also review your disability coverage, an area people often leave themselves exposed to risk as you are much more likely to become disabled than to die prematurely.
  8. Review your tax plan. Work with your financial advisor to identify opportunities for tax savings. Tax laws change frequently and you should understand how these laws affect you.

Joseph M. Jennings, Jr., CFA, Senior Vice President, Investment Director, PNC Wealth Management has 14 years of wealth management experience. He is a Chartered Financial Analyst (CFA) charter holder and member of both the CFA Institute and the Baltimore CFA Society. He can be reached at