When it comes to managing finances, you should take the major decisions together. Moreover, you can divide the responsibilities of looking after everyday bills and major investments depending on who does what better.
5 Secrets to Successful Money Management for Couples
People often say that "money doesn't buy happiness". However, when you are in a married relationship, discussing how to deal with money matters is a wise and cautious thing to do. A strong financial base will not only bring you and your partner together, but it will also help you to grow. Thus, it is important to talk about how to manage finances as a couple.
This is why you should make sure you and your partner are on the same page about what to do with your money. Here are some tips that will help you make responsible financial choices.
5 Secrets for Healthy Money Management for Couples
1. Discuss Your Monetary Goals
Couples should be aware of each other's long-term plans which include their financial plans as well.
- Problem: In many scenarios, partners have separate plans about what to do with their money in the long run. When these goals are not discussed beforehand, it can cause differences and disputes in the relationship.
- Solution: To avoid this situation, talk about your short and long-term financial goals. These goals can include buying small household items or significant purchases like a car or a house. When you communicate with your partner about your shared goals, it can help you achieve them sooner. It also clears the perspective about your immediate priorities on which you should spend your money.
If both you and your partner wish to buy a house in the future, you can talk about how each one is going to contribute towards that. If you have certain monetary interests that do not align, you can discuss them and come to a harmonious settlement that suits you both.
2. Be Forward About Your Financial Situation
Do not withhold information about your finances from your significant other as it will cause disputes in the long run.
- Problem: Couples often refrain from asking or talking about money matters before marriage. However, this is unwise since a bad financial history on anyone’s part can be damaging to the relationship. It causes a breach of trust between partners and also puts a burden on their financial future.
- Solution: To make sure this does not happen, be open about your spending habits, loans, debts, etc. from the very beginning, and ask your partner to do the same. This maintains transparency in a relationship and lets you plan for any major goals.
Ask your partner if they are comfortable discussing monetary history. In case they are reluctant to share such details, let them know why it is important for stable financial standing.
3. Divide Your Financial Responsibilities
Sharing expenses is an effective way to get rid of money problems. This is also a good way for both you and your partner to feel valued and empowered in the relationship.
- Problem: Many times only one of the partners is responsible for providing money for the expenses which burden them. Even in cases where partners share the bills, it is often not done fairly and miscommunications regarding this can cause financial issues among them.
- Solution: Chalk out a plan regarding who will provide for what portion of the expenses that you incur in your daily life. Moreover, you can consider each of your incomes and if someone earns more, they can be responsible for a slightly bigger amount of the total spend.
Calculate your total household expenses in a month. If you earn more than your spouse, you can pay for the aspects that cost more while your partner can pay for less extravagant things and vice versa. You can also create a joint account to pay for your shared expenses.
4. Save in Advance for Important Events
According to many experts, 10% or more of a couple’s combined income should be put into savings. Moreover, it is always a great thing to put aside money for significant events.
- Problem: Most weddings are expensive and thus not saving up for it beforehand can put an immense monetary burden on you. It may also deprive you of a significant chunk of your savings. Apart from that, if you do not have prior savings, it will deprive you of many significant joys in your life.
- Solution: Apart from your regular savings, create a fund to pay for other important moments in your life such as weddings, honeymoons, etc. Moreover, you can also save in advance for other events such as birthdays and anniversaries of not only you but also your friends and family. This way you do not have to reach for personal or joint savings to pay for them.
Consider that you are planning to go on a vacation with your partner. Save a portion of your income over months so that you can enjoy a trip without worrying about the costs.
5. Create a Budget
Budgeting is the ultimate hack to check unnecessary spending habits and save money.
- Problem: Many scenarios show that one partner spends more or less than the other. This discrepancy in spending habits although manageable can often get out of hand if there is no system among couples to control it.
- Solution: Calculate your income and necessary expenses to get an idea of how much money you will have left after paying the bills. Then you can decide how much money to put into savings and extra spending. If necessary, you can talk to your partner to increase or decrease the spending limit in various sections to meet your joint spending budget.
You can use the 50-30-20 rule of money management. It states that 50% of your income should go towards things you need, 30% towards your wants, and 20% towards savings and investments.
If in a particular month, you and your partner have major expenses to meet, you can cut back on other minor indulgences to avoid going over your set budget.
Money management for couples is no doubt challenging. However, with a little patience, correct techniques, and proper communication, it contributes to creating a strong financial relationship.
FAQs about Money Management for Couples
Create a system where if you feel like your partner is over-spending, you can talk about it without hurting each other’s feelings. It is also a good idea to agree on a monthly amount that you can each spend in individual ways. This will give financial freedom to your relationship.
You should appreciate your partner for the roles that they play which are beyond monetary value. If one person earns more, they should empower their spouse so that it does not create a power imbalance.
If one of you has a bad credit history, it is advisable not to open a joint account. Furthermore, if you decide to have a joint account, set some ground rules about what you can use it for, how much money each of you can withdraw and how frequently.
You and your partner can work together to pay off the debt if you find it feasible. However, before combining your finances, carefully review the debt as it can affect your credit score.
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