Money and relationships are two interesting subjects that intertwine with each other. One of the big reasons why marriages end is because of money issues. Money issues are so troublesome that people who say they’re experiencing stress in their relationship cite finances as the number one reason. Money issues are also responsible for 22% of all divorces, making it the third leading cause, according to the Institute for Divorce Financial Analysis. Learning how to manage finances as a couple can be tricky to sort out with two incomes and two financial situations merging.
While you’re trying to manage money jointly, there could be major differences in income especially when one partner is the clear breadwinner, or the other half is shouldering steep credit card or student debts.
So how can you as a couple continue to maintain and build healthy relationships while also continuing to work towards their financial goals? Here are a few different ways you can approach money and avoid financial stress:
Combine Your Finances
Each person deposits their income into a joint checking account and both people are using the account and sticking to an agreed-upon budget. But to make this work, your need to sit down with your partner, tally up your joint income, and then carve out and agree on a budget that covers all shared expenses, from housing to groceries and bills. Doing this requires complete transparency with finances. This means you also need to agree upon discretionary spending. With your finances so intertwined, you need to be accepting and on the same page with your spending. You are on the same team working towards the same goals.
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Recognize Your Partner’s Money Mindset
Knowing how your spouse views money and how they were raised around money. One of you might be the saver and the other is more inclined to spend.
While personality differences cause some marital problems, it isn’t the real root of your money and marriage issues. The source of the problem is whenever one of you neglects to hear the other’s input, or when one of you bows out from handling the finances altogether.
Come up With a System
It is important for couples to have some ground rules in place to determine, for instance, what purchases need to be discussed ahead of time or what the reasonable spending limit is on clothing, kids’ toys, food, or other household items. It is important for spouses to have some sort of mutually agreed upon a system to ensure they’re both on the same page when it comes to spending.
Create a Budget
Get all your bills and paperwork together and literally put everything on the table. Calculate just how much you’ll owe each month, how much-combined income you’ll have, and what’s actually left when everything’s said and done. Don’t forget to factor in any potential wedding or honeymoon expenses. Also, it’s helpful to set spending limits. Before you take those vows, agree on a set dollar amount each of you can spend without talking to the other first.
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Set Expectations Together
When it comes to money and relationships, unmet expectations can cause a lot of conflicts. The quickest way to feel unfulfilled and unsatisfied with your spouse is when you expect things to go a certain way, only to find out that reality is a bit different.
Don’t let your unrealistic expectations pave the way for money and marriage problems!
Give Each Other Some Breathing Room
Talking to your spouse about all of your purchases can feel very restricting, especially when you find yourself having to defend a purchase that your partner doesn’t endorse. I recommend having a line item on the families budget titled “fun money”. These are the funds that can be used any way they choose and partners don’t need to report back to one another each month as to what they used those funds for.”
Have a Financial Night Every Month
Financial management in a relationship should be healthy, stress-free, and fun.
So you set some time aside every month to keep track of your savings and expenses. You can discuss an additional expense in the near future, or you need to save for something in the future. Discuss everything and make sure that you both talk about it openly. This will help you in managing finances in marriage.
Establishing how to manage finances as a couple early on in your relationship is an integral part of a healthy, happy, and financially stable life together. Start off on the right foot by talking about good financial stewardship and coming up with a plan to deal with budgeting, spending, and investing.
There’s no single best practice for budgeting a couple’s money. You and your partner might not fit into a perfect cookie-cutter way to manage your money. That’s okay. Personalize a method, combine two methods, ditch it all and come up with your own way to manage money. Once you choose a method, don’t be afraid to tweak or change it.
What are some of the tips you have used to manage finances as a couple?