How to Manage Your Money as a Couple
In my line of work I come across two types of couples when it comes to money. Either they have “his” and “hers” accounts and bills or they share everything in one joint bank account. Personally I think it’s a lot easier to keep track of expenses and share the burden of bills and debts payments if the couple are working as a unified team and not keeping things separate. It’s very difficult to budget a family’s income and expenses if you don’t communicate and keep an open, honest dialogue when it comes to money.
Here are my five points for managing money as a couple that I believe are crucial to a successful budget and relationship.
Be Open about Money
It’s important to talk to your spouse about your spending habits and financial goals. If they don’t know what the goals are, or if the goals are unrealistic, they will never be achieved. Talk about assets, debts, and the budget in an honest, upfront, and realistic manner. I strongly suggest that couples do not keep hidden bank accounts or credit cards from each other. It’s almost impossible to tackle paying off a debt if the other person thinks there is more disposable income than there really is. Lay all your cards on the table and discuss what your goals are and what your “real” financial situation is.
Sharing your budget concerns and goals will go a long way to foster team spirit and keep each other honest when it comes to spending habits. If it’s anything like my relationship, your spouse will keep you on track and on target to achieve your mutual saving goals or debt repayment plans.
Know where you are going
Without question it is important to have a budget. There’s no better way to see where the money goes every month and how to cut back if that is what’s required. Tracking your expenses for a month is a great way to see what items really cost. I guarantee you will each have that “AHA” moment when you realize what a case of beer every weekend costs or what frequent trips to the mall are setting you back. There’s no magic involved in a budget, but it does take diligence and dedication. These expenses won’t track themselves so it’s up to you. Use a note pad. Download a fancy app. Whatever works for you is fine. You just have to do it!
Set the same goals
This step might cause a little friction but it is important and cannot be skipped. It’s is all about understanding the other person’s needs and wants, and being open to adjusting yours as well. Compromise will get your further than arguing and will leave you both still talking to one another. Talk about you goals and where you think the money should be spent. If cut backs are needed, be realistic about them and make sure you each have to give up a little something to make it fair. There’s no need to plan everything down to the last detail, but be thorough and cover the basics.
Pick a Money Management Plan
Whether you use the envelope method, or if you have the self discipline to keep the money in an account, make sure the plan you chose is something you can both stick to. There’s nothing more frustrating than having one person in the relationship who can’t (or won’t) follow the plan. You need to both be on board for this to work. There are a ton of different systems out there. Pick one that works for you as a team and then get it into motion. In my opinion, the envelope system is still the best option. It makes accessing the money a little more difficult but will keep you honest about your spending and allow other person in the couple easy access to what was spent and what is left. Forgetting about money earmarked in an account for clothing can happen to the best of us, but if the cash is sitting in an envelope waiting for the bill to come due it will be a lot harder to dip into the fund for a little weekend fun.
If you decided to keep the money in a bank account, and if one person has less self control, limit their access to the funds in the account. Go to the bank and disable interact purchases or access to certain accounts. Give yourselves an “allowance” in cash every payday. Once the money is gone, your spending will have to wait until the next payday. Keep each other honest and things will work out in the end.
Have Equal Say in the money matters
Like everything else in the relationship, money should be a joint partnership. When it comes time to make a big purchase decide together what should be spent and when it should happen. Purchasing something big without the other person’s knowledge will only lead to hurt feelings and mistrust. Yes it’s nice to be surprised with a gift on your anniversary or birthday, but we’re adults trying to manage our money and surprises often lead to us owing more than we can afford. Decide together what you’ll spend money on and what gifts, if any, will be purchased with the hard earned savings.
These steps will not likely happen overnight and will take some time for adjustments, but with open communication and diligent budgeting you will soon see real improvements and progress. Celebrate your accomplishments and discuss your pitfalls. If you stick with it you’ll have a plan in place that works for you in no time.
What are some of the strategies you and your significant other use when managing money?