You know you’re in a serious relationship when you’ve met your partner’s parents, given each other nicknames, and had your first money-related fight. Finances are one of the most common reasons couples quarrel, whether it’s blaming each other for spending too much or not contributing enough to monthly outgoings. But don’t despair, almost all of us have been there at one time or another and with our five handy tips, you can avoid future confrontation and reconcile love and your money.
It’s good to talk! So, before you come up with a plan for your finances, sit down and talk to each other. Start by addressing your money habits with honesty. Who tends to spend more? Who’s got more savings? Who’s in debt? This isn’t about keeping scores, it’s about getting the overall picture of your current financial situation, so you can find a solution that works for you as a couple. After looking at your financial habits, move on to your goals. Do you share dreams or ambitions, big or small? If so, discuss how much money you’ll need and how you’ll reach your targets. You and your partner might want to get a car in the next 5 years, buy a huge house in 10 years, or just go to Patagonia next summer. Outlining your couple goals can help you deal with your finances rationally and peacefully.
Share the burden
Now that you’ve discussed your goals and agreed on priorities, you and your partner can start managing your finances as a team. The key to good financial management is to align your long-term aims with your short-term spending. Make a list of all your monthly bills and agree who pays for what. Then, discuss what to do with your leftover money, you could budget some for spending and some for saving. Also, make sure you’re both contributing a fair proportion of your disposable income when it comes to paying bills, rent/mortgage, and groceries.
Have you ever thought about opening a joint account with your loved one? If you and your partner are tempted by it and want to combine your finances, you need to prepare yourself in order to avoid bad surprises. Before you open a joint account, make sure you trust your partner enough to not empty it because of impulse purchases. Have an honest conversation and agree on a spending plan. Consider tracking your spending. Some couples put everything in an Excel spreadsheet and review their spending weekly to stick to the budget they agreed on. If you’re a bit wary about opening a joint account or if you’ve tried the joint strategy but it ended up creating more conflicts in your relationship, you can come up with a hybrid system in which you both keep your personal accounts but share some of your finances to pay for bills, mortgage, or food.
Go for growth
Having a cash savings account can help you fund your joint dreams, however when inflation is outpacing interest rates, you may want to find an alternative solution, especially if you’re saving for long-term growth. Also, don’t forget to keep an emergency cash fund in case you need it. If you and your partner are happy to take an element of risk, you could decide to invest some of you finances in the hope of getting the house of your dreams or the enjoyable retirement you deserve. Investing as a couple requires you and your loved one to constantly communicate: what are you investing for? How much can you afford to put in? How much risk are you willing to take? After answering these questions together, you might want to see how robo-investing services can help you Wealthify your future.
Kick the tyres
When you manage your finances jointly, regular reviews of your accounts and spending can be very useful. Every month, you could check how well you and your other half are doing with the financial plan you’ve set. What’s working well? Can you save or invest more? What could you improve? It’s also an opportunity to adjust your plan when something isn’t working so well. Consider potential changes in your financial situation. If one of you is thinking about going onto a new career path, anticipate the possible impacts on your finances, and start modifying your financial plan accordingly. Overall, handling your finances as a couple requires constant communication, honesty, and trust.
Please remember that the value of your investments can go down as well as up and you could get back less than invested.
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The comments and opinions expressed in this article are the author's own and should not be taken as financial advice from Wealthify.