When Wedding Bells Ring, Give Newlyweds the Gift of Financial Confidence

When Wedding Bells Ring, Give Newlyweds the Gift of Financial Confidence

Whether your clients themselves are saying “I do,” or your clients’ adult children are heading down the aisle, one of the best gifts you can give newlyweds of any age is a path toward financial wedded bliss.

As soon as you hear the good news, take the time to share some important tips to help them make smart decisions—from this day forward.

Offer to meet with the happy couple face to face to talk through each of these four tips, or send them in a note or an email with an offer to help in the future. That type of personal guidance may very well turn two people who are making a lifetime commitment to each other into your own clients for life.

1. Know (and stick to!) your wedding budget

The desire to plan the perfect wedding day can make it easy to get carried away when it comes to your budget. And while it may not be the most exciting topic associated with planning your big day, knowing—and sticking to—your budget is something you’ll be thankful for long after the party’s over.

Your budget will affect every choice associated with your wedding, and every choice you make will affect your budget. Because of that, it is important to talk about how much you can spend before you start making any formal arrangements. Once you know how much you have to work with, research the per-person price of weddings in your chosen location. Determining how many people you can afford to invite before you send that ‘save the date’ announcement can save hurt feelings later on if you need to downsize. After you’ve chosen your date and venue, selecting vendors will also be much easier with a firm budget in mind. Decide where you want to splurge, where you can skimp, and negotiate based on those numbers. By planning with close attention to your budget, not only will your guests remember a fabulous celebration for years to come, but you’ll also take your vows knowing you’re not walking down the aisle straight into debt.

2. Have “the money talk” before you tie the knot

An important part of planning for the start of your married life is planning your financial life together. Just like any other partnership, a successful marriage requires openness, trust, respect, and honesty. From a financial perspective, that means you both need to be well informed and in agreement about every aspect of your money.

Decide if you’re going to merge your finances, share some but not all of your assets, or keep your finances separate and share expenses. Regardless of how you decide to manage money within your home, you are financially tied from a legal perspective, so discuss any debts you may be bringing into the marriage, including student loans, credit card debt, car payments, mortgages, etc. If this is a second marriage, be sure you understand any spousal or child support requirements. As a married couple, even old debts are now joint debts, so be clear about how you’re going to handle them moving forward. And be honest about your financial habits—good and bad. If one of you is a saver and the other is a spender, you may be in for some surprises that could have a negative impact on your relationship. Last but not least, share your financial goals and create a plan to make those dreams a reality. Your financial advisor can help you create a plan and, most importantly, help you work together as partners to stay on track. 

3. Get smart about taxes

Taxes are more complex as a couple, so it’s a good idea to talk to your CPA or financial advisor long before tax time. Start by adjusting the tax withholding from your individual paychecks. Next, explore how you will file your taxes so you can plan accordingly. If you’re a dual-income couple, you may find that your combined tax bill is larger than if you file individually. While changes to the standard deduction have eased the potential for a “marriage penalty,” if your combined income level pushes you into a higher tax bracket, you may need to take a different approach. 

4. Understand your marriage rights and benefits

Getting married is more than just a personal commitment between you and your spouse. The moment you say, “I do,” your relationship gains a legal status that gives you a number of new rights and benefits—both legal and practical.

Once you’re officially married, be sure to update your beneficiary designations for all insurance policies, bank accounts, and retirement plans, as well as all emergency contact lists. Review and coordinate your workplace benefits, and ask your financial advisor to review your insurance policies to be sure your coverage is appropriate. Because you now have the ability to not only receive Social Security, Medicare, and disability benefits for each other, but also to make medical decisions if your spouse is unable, be sure you understand each other’s wishes. Even better, put those wishes in writing so there’s no doubt in your mind during a crisis. Now is also the time to update and/or create a will or a trust. These estate-planning documents are an important part of your fiscal responsibility to each other.

Getting married is a big step—and a big change. It means sharing your home, dreams, life, and financial responsibilities. No matter what your age or financial circumstances, including a financial advisor in your pre- and post-wedding preparations can help you to establish joint financial priorities, get on the same page with money matters, and ensure that your financial plan aligns with your new life as a couple.

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The information and opinions herein are for general information use only. The opinions reflect those of the writers but not necessarily those of New York Life Investment Management LLC (NYLIM). NYLIM does not guarantee their accuracy or completeness, nor does New York Life Investment Management LLC assume any liability for any loss that may result from the reliance by any person upon any such information or opinions. Such information and opinions are subject to change without notice and are not intended as an offer or solicitation with respect to the purchase or sale of any security or as personalized investment advice. 
Laura McCarron
Building Smarter Portfolios
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Laura joined New York Life & MainStay Investments in 2009, and is currently the Director of Value Add Marketing. She is responsible for the development of investor educati ... Click for full bio

All the Talk of an Accelerating Economy and Rising Inflation Just Doesn't Add Up

All the Talk of an Accelerating Economy and Rising Inflation Just Doesn't Add Up

The biggest news for the markets this week came from the Federal Reserve. On Wednesday, it released the January Federal Open Market Committee meeting notes and they were interpreted as dovish by some and hawkish by others as analysts raced to divine insight from the text.

The recent data isn’t supporting the narrative of accelerating global growth and inflation while equities continue to experience higher volatility.  What does it mean for stocks, bonds and yields? Glad you asked! Here’s my take on why all the talk on an accelerating economy and rising inflation just doesn't add up when you look at the data.

Equity Markets — A Relatively Narrow Recovery

The shortened trading week opened Tuesday with every sector except technology closing in the red. The S&P 500 fell back below its 50-day moving average after Walmart (WMT) reported disappointing results, falling over 10% on the day, having its worst trading day in over 30 years.

Walmart’s online sales grew 23% in the fourth quarter, but had grown 29% in the same quarter a year prior and were up 50% in the third quarter. We saw further evidence of the deflationary power of our Connected Society investing theme as the company reported the lowest operating margin in its history.

Ongoing investment to combat Amazon (AMZN) and rising freight costs — a subject our premium research subscribers have heard a lot of about lately — were the primary culprits behind Walmart's declining numbers. To really rub salt in that wound, Amazon shares hit a new record high the same day. This pushed the outperformance of the FAANG stocks versus the S&P 500 even higher.

Wednesday was much of the same, with most every sector again closing in the red, driven mostly by interpretations of the Federal Reserve’s release of the January Federal Open Market Committee meeting notes. In fact, twenty-five minutes after the release of those notes, the Dow was up 303 points . . . and then proceeded to fall 470 points to close the day down 167 points. To put that swing in context, so far in 2018, the Dow has experienced that kind of a range seven times but not once in 2017.

Thursday was a mixed bag. Most sectors were flat to slightly up as the S&P 500 closed up just +0.1%, while both the Russell 2000 and the Nasdaq Composite lost -0.1%. The energy sector was the strongest performer, gaining 1.3% while financials took a hit, falling 0.7%.

The recovery from the lows this year has been relatively narrow. As of Thursday’s close, the S&P 500 is still below its 50-day moving average, up 1.1% year-to-date with the median S&P 500 sector down -1.0%. Amazon, Microsoft and Netflix alone are responsible for nearly half of the year’s gain in the S&P 500. The Russell 2000 is down -0.4% year-to-date and also below its 50-day moving average. The Dow is up 78 points year-to-date, but without Boeing (BA), would be down 317 points as two-thirds of Dow stocks are in the red for the year.

Related: We're Back to “Bad News is Good News” and “Good News is Great News”

Fixed Income and Inflation — the Coming Debt Headwind

The 1-year Treasury yield hit 2.0%, the highest since 2008 while the 5-year Treasury yield has risen to the highest rate since 2010, these are material moves!

What hasn’t been terribly material so far is the Fed’s tapering program. It isn’t exactly a fire sale with the assets of the Federal Reserve down all off 0.99% since September 27 when Quantitative Tightening began, which translates into an annualized pace of 2.4%.

As for inflationary pressures, U.S. Import prices increased 3.6% year-over-year versus expectations for 3.0%, mostly reflecting the continued weakness in the greenback. The Amex Dollar Index (DXY) has been below both its 50-day and 200-day moving averages for all of 2018. The increase in import prices excluding fuel was the largest since 2012 and also beat expectations. Import prices for autos, auto parts and capital goods have accelerated but consumer good ex-autos once again moved into negative territory.

Outside the U.S. we see little evidence that inflation is accelerating. Korea’s PPI fell further to 1.2% - no evidence of rising inflation there. In China the Producer Price Index fell to a 1-year low – yet another sign that we don’t have rising global inflation. On Friday the European Central Bank’s measure of Eurozone inflation for January came in at 1.3% overall and has been fairly steadily declining since reaching a peak of 1.9% last April. This morning we saw that Japan’s Consumer Price Index rose for the 13th consecutive month in January, rising 0.9% from year-ago levels. Excluding fresh food and energy, the increase was just 0.4% - again, not exactly a hair-on-fire pace.

The reality is that the U.S. economy is today the most leveraged it has been in modern history with a total debt load of around $47 trillion. On average, roughly 20% of this debt rolls over annually. Using a quick back-of-the-envelope estimate, the new blended average rate for the debt that is rolling over this year will likely be 0.5% higher. That translates to approximately $250 billion in higher debt service costs this year. Talk about a headwind to both growth and inflationary pressures. The more the economy picks up steam and pushes interest rates up, the greater the headwind with such a large debt load… something consumers are no doubt familiar with and are poised to experience yet again in the coming quarters.

The Twists and Turns of Cryptocurrencies

The wild west drama of the cryptocurrency world continued this week as the South Korean official who led the government’s regulatory clampdown on cryptocurrencies was found dead Sunday, presumably having suffered a fatal heart attack, but the police have opened an investigation into the cause of his death.

Tuesday, according to Yonhap News, the nation’s financial regulator said the government will support “normal transactions” of cryptocurrencies, three weeks after banning digital currency trades through anonymous bank accounts. Yonhap also reported that the South Korean government will “encourage” banks to work with the cryptocurrency exchanges. Go figure. Bitcoin has nearly doubled off its recent lows.

Tuesday the crisis-ridden nation of Venezuela launched an oil-backed cryptocurrency, the “petro,” in hopes that it will help circumvent financials sanctions imposed by the U.S. and help improve the nation’s failing economy. This was the first cryptocurrency officially launched by a government. President Nicolás Maduro hosted a televised launch in the presidential palace which had been dressed up with texts moving on screens and party-like music stating, “The game took off successfully.” The government plans to sell 82.4 million petros to the public. This will be an interesting one to watch.

Related: Warning: Suppressed Volatility Ultimately Leads to Hyper-Volatility

Economy — Maintaining Context & Perspective is Key

Housing joined the ranks of U.S. economic indicators disappointing to the downside in January with the decline in existing home sales. Turnover fell 3.2%, the second consecutive decline, and is now at the lowest annual rate since last September. Sales were 4.8% below year-ago levels while the median sales price fell 2.4%, also the second consecutive decline and this marks the 6th decline in the past 7 months. U.S. mortgage applications for purchase are near a 52-week low.

Again, that’s the latest data, but as we like to say here at Tematica, context and perspective are key. Looking back over the past month, around 60% of the U.S. economic data releases have come in below expectations and this has prompted the Citigroup Economic Surprise Index (CESI) to test a 4-month low. Sorry to break it to you folks, but the prevailing narrative of an accelerating economy just isn’t supported by the hard data. No wonder that even the ever-optimistic Atlanta Fed has slashed its GDPNow forecast for the current quarter down to 3.2% from 5.4% on Feb. 1. We suspect further downward revisions are likely.

Looking up north, it wasn’t just the U.S. consumer who stepped back from buying with disappointing retail sales as Canadian retail sales missed badly, falling 0.8% versus expectations for a 0.1% decline. Over in the land of bronze, silver and gold dreams, South Korean exports declined 3.9% year-over-year.

Wednesday’s flash PMI’s were all pretty much a miss to the downside. Eurozone Manufacturing PMI for February declined more than was expected to 58.5 from 59.6 in January versus expectations for 59.2. Same goes for Services which dropped to 56.7 from 58 versus expectations for 57.7. France and Germany also saw both their manufacturing and services PMIs decline more than expected in February. The U.K. saw its unemployment rate rise unexpectedly to 4.4% from 4.3%

The Bottom Line

Economic acceleration and rising inflation aren’t showing up to the degree that was expected, and this was a market priced for perfection. The Federal Reserve is giving indications that it will not be providing the same kind of downside protection that asset prices have enjoyed since the crisis, pushing markets to reprice risk and question the priced-to-perfection stocks.

Lenore Elle Hawkins
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Lenore Hawkins serves as the Chief Macro Strategist for Tematica Research. With over 20 years of experience in finance, strategic planning, risk management, asset valuation an ... Click for full bio