Managing your finances together in a serious relationship is more challenging than you think. It is important that you design a good money management strategy that benefits both you and your partner to avoid arguments and financial losses later. Your attitude and savings greatly affect the way you manage your finances. Although some partners share the burden of financial responsibilities happily, others may be reluctant to even discuss their monetary situation. Sit down and try to understand each other’s approach to money, making mutual decisions for effective financial management.
After all, the financial decisions you make impact not just your relationship but your children as well. As a couple, you have to be prepared to deal with difficult situations, which may occur unexpectedly, such as medical emergencies, or loss of employment. Hence, you need to have a rainy day fund in place. Plus, you need to set aside money for your children’s education, your house payment, and any other major expenses you have planned. It is virtually impossible for just one spouse or partner to control the finances in a smooth and streamlined manner, especially when there are multiple dependents.
To make things easier for you, here’s a look at 10 keys to successfully manage finances in a marriage.
Everyone is different and so is our approach to spending and saving. Regardless of the money you make every year, there are a few basics of a good budgeting system. There are numerous things you should discuss with your partner for managing finances in a long-term relationship. Foremost among them is debt. You should disclose all debts and the monthly payments you make to your partner. Also, you will be saving money and building assets with your partner. Discuss how you both can work towards increasing your wealth as a couple.
Moreover, there is a chance that you have different spending and saving habits as compared to your partner. Discuss your strengths and weaknesses before creating a monthly budget to allocate responsibilities and tasks. For instance, can you pay bills as soon as you receive them or do you delay them until the last minute? Are you good at tracking expenses or your partner can maintain a spreadsheet to know how much you have spent in a month? Can you two work with a joint account without arguing? Does your job enable you to save on commuting and other expenses?
When you successfully determine the kind of lifestyle and financial management style, managing finances becomes easier. Set a limit and avoid spending more than this figure every month. When you are able to save enough and plan carefully, money management seems less challenging and a manageable task. You should be able to save enough for your retirement days, if you want to spend your later years of life without jeopardizing your relationship.
Investments and financial decisions you make throughout your life will have a huge impact on how your relationship survives during the final decades of your life. Do all or at least a small amount of paperwork together. Pay the bills on time. Taking care of your expenses efficiently and by prioritizing, you won’t have to stress missing payments and whatnot. Plus, prioritizing everything will also keep your spending pattern in check.
While it’s a great idea to share all expenses, allocate a certain amount of money that you can spend without asking or informing your partner. This way you will not get into any unwanted argument over hidden expenditure. By all means, maintain a joint account where you can save some money for entertainment and recreation. Shopping for the holidays or going anywhere for a vacation are two pretty big expensive. Make sure you use this account to spend for these things. Here are 10 tips to sharing finances in a long term relationship:
Adopt Practical Habits
Some couples argue endlessly to prove that a partner is less responsible and non-serious towards money matters. Instead of arguing, reflect on the spending pattern of your partner and take a look at how you are spending yourself. Observe who needs to cut down on doing un-necessary purchases and benefit from discounted deals or flash sales from trusted retailers.
Do not feel guilty to bring up money matters into everyday conversations. The more involved you become with your relationship, the easier it becomes to talk about financial matters. There is no point in hiding financial matters from your partner.
Compare Your Financial Strategies
Know about mutual interests and the things that you would like to do as a couple after moving in together. Compare your spending and saving strategies. Set goals to know how you should go about your financial management journey. Forgive past mistakes and focus on the future. Come up with a strategy to pay off debts and deal with money at any given moment. Learn about your partner’s spending habits and help him/her make better decisions on how to adopt a financial lifestyle after you get married. This will set a solid financial foundation for your relationship.
Check Your Partner’s Credit Score
About 57 percent of couples look into their partner’s credit score before entering into a serious relationship or marriage. While it seems rude to ask your partner’s credit score before marriage, knowing about his/her credit history will give you an insight about the kind of you life and the challenges you might have to face ahead. This is crucial if you plan to buy a house or a car together. Your partner’s credit score, particularly if he is the sole earner, will determine your credit limit and also the interest you will have to pay on any credit line you avail.
Share Your Debts
Sharing your partner’s financial woes seems like doing too much. You will actually be relieved once your partner is free of debts. The sooner it is the better. Get to know about how much your partner needs to pay and pool in what you can to contribute on your part. Prolonging debts and delaying payments will eventually affect your own individual credit scores and other factors. Helping your partner means helping your relationship.
This is particularly important when only one partner is working. If you have to deal with debt as a married couple, you might have to take up a job to supplement the family income and to support your spouse in paying off the remaining debt.
Save for Recreation
Saving for dreams trips and big purchases should always be a mutual effort. Experts suggest putting aside at least 10 percent of your combined earnings into a joint account every month. This way you will be able to plan a trip together at some point or buy something that you always wanted, such as your own house. You can even have a specific amount of money in mind as a target that you want to reach. This will give you added motivation to keep saving. Who knows you might end up needing the money in an emergency situation.
Benefit From Your Strengths
Take advantage from individual strengths when you are in a long-term relationship. Maybe you are better at managing the cash flow and your partner is great at making lucrative investments. Therefore, you should each play to your strengths. As a married couple, you are a team who has to make the best possible decisions for your family. This is only possible when you are on the same page and understand the role you have to play when it comes to your finances as a couple. Complement each other with your strengths and you will be able to overcome any potential weaknesses.
Accountability is important when two people live together and share financial responsibilities. While keeping some financial independence is mandatory, you must set boundaries for individual and mutual expenses. It’s never fun to know about impulsive purchases or unwanted items that you don’t need to buy. This is why experts recommend that couples maintain a joint checking account so that each partner knows the status of the finances at any given time. This removes room for doubt and also makes both partners accountable to each other, which is crucial when managing your finances together.
Consider Career Moves
Sometimes, all it takes for a relationship to become trouble-free is a career move. Current socio-economic changes have altered social roles and any partner can be earning or spending more in a relationship. Re-evaluate how each of you can benefit from a career shift or a new job. Sometimes, you need to relocate for your partner’s job. Discuss all required changes before making a big career move so nothing comes as a surprise to your partner. Any long-term relationship is only successful when you make decisions after informing and discussing with your significant other.
Find ways to make beneficial investments. Learn something new or take up a hobby that you can do together after your day job to earn some extra money. Make mutual or individual purchases to help you manage finances during unforeseen life changes. The key to making this work is taking your partner into confidence at each stage. Discuss your investments and potential opportunities so that you can make the best possible decision as a couple. Seek professional help if need be when deciding on investment opportunities, just so you can capitalize on the best opportunities that present themselves to you.
Work as a Team
No matter how interested you are at managing money efficiently, nothing can be accomplished on an individual level if your partner is not playing his role in maintaining a healthy relationship. Do not try to control all the expenses. Rather come to a mutual understanding that clearly defines your financial responsibilities. You have to do this from the outset, i.e. at the time you officially become a couple and plan to merge your finances. As a couple, you have to keep all expenses and income transparent so that your partner has a clear idea of what’s going on at any given time.
It is only natural to assume that you are paying more when you are in a relationship. If you are comfortable in taking turns to manage finances, alternate the responsibilities of paying utility bills, mortgage payments and grocery bills. This way you will have an idea of how it feels to pay for even seemingly trivial tasks.