Smart With Your Money as a Couple
It’s this simple: Money can ruin your marriage. In fact, it’s the number one problem in marriages and the number one cause of divorce. People often underestimate the commitment in merging two lives together. The reason we fight most about money is because it’s the most measurable. Sure, compromises also need to be made when it comes to issues of time, space and affection, but with money, the give and take is quantifiable.
Rule #1: Financial goals should be agreed upon as a couple.
Together you create the budget. Relationships are mutually defined, and each partner needs to be comfortable with any guidelines you set. Don’t build resentment if you’ve agreed to it.
Rule #2: Finances should be combined as a team effort. (Oneness yet separateness)
TRAP: Most couples start out with their finances separate, then eventually they start a joint account. Paychecks get deposited into their individual accounts, then they transfer an agreed upon amount into the joint account. Or, they each agree to pay certain bills and keep accounts completely separate.
- Rule 2.1: Paychecks should be deposited into a joint “bills” account.
- Rule 2.2: Everyone should have some financial freedom. Whether $5 or $500, discretionary income is a must for any partnership. If you want to run it through a shredder, it ought to be your right to do so. Having your own money helps you feel like you haven’t given yourself up in order to be part of a relationship. It’s important to have independence and your own discretionary money so having separate accounts is important for spending.
Rule #3: Bank Account Setup: 4 Accounts
- Account 1-Bills (Joint) – All “bills” get paid from this account. This includes your house payment, car, credit cards, student loans, utilities, netflix, and anything else that is recurring and predictable. You can easily budget the amount needed for your bills account because most bills should be recurring. Some may be once per quarter or even yearly, but should still be paid from the bills account.
- Accounts 2 & 3- Individual Checking Accounts
This is where the financial freedom and separateness comes in. All daily spending comes out of these accounts and should be part of your agreed upon budget. This includes necessary items like groceries or gas, as well as discretionary spending like movies or clothing. The agreed upon amounts should be transferred on a monthly or bi-weekly basis into the accounts.
Important note: These accounts will not have the same amount budgeted for each. One person may do the grocery shopping and need more money. One may have to dry clean clothes for work, or have a car that uses more gas. The amounts should be discussed and agreed upon as part of your family budget.
- Account 4-Savings Account (Joint) – You save money together. It is recommended that a certain percent of your income gets deposited directly into your savings account each month. This can be one account, or multiple accounts. A common use for the savings account is to save for once per year expenses – vacation, personal property taxes, or emergencies.
Rule #4: One person in the couple should handle the bills.
This does not mean the person paying the bills is in charge of all the money. They are just the one responsible to make sure they are paid and the budget is executed. Regular meetings should be setup to review spending.
Rule #5: There must be accountability and transparency with spending.
While financial independence is important, it must be balanced with accountability. Don’t hide your spending habits from your spouse. Live within the boundaries you’ve set. Consult your spouse before purchasing big-ticket items.
Download the Infographic here: Smart With Your Money For Couples
Rule #6: Put everything on Autopay.
This can only happen when you can get over the hump financially and stop living paycheck to paycheck. This is why a budget is important. Financial stress goes down significantly if your minimum balances never go close to zero in your bills account.
- Setup recurring payments in your online bill pay for all accounts that don’t vary in amount.
- Variable bills like utilities can be setup through each individual website to auto-withdraw from your account.
- Setup credit cards to auto-withdraw each month at least the minimum payment. Credit cards charge a $39 fee if you are even one day late. This will prevent you from ever paying a late fee. Then you can login to pay more than the minimum. Optimally you should have the full balance withdrawn each month. CAUTION: it is encouraged to minimize credit card usage because everything should be spent out of your bank accounts.
Additional Suggestions:
- Don’t live in a fairytale! Get real about how much money you have. Set a realistic budget and financial goals. Don’t justify purchasing something you can’t afford.
- Emotional problems can’t be solved with money. Take a hard look at what’s really behind your spending habits.
- Don’t let yourself get taken advantage of. Are you working 80 hours a week just so your spouse can live beyond your means? That’s not being a partner; that’s being a paycheck, and it won’t fix the problem.
- Negotiate, and then renegotiate when necessary. You made these life decisions together, and you can change them together.
- Educate yourself. Marriage is a partnership, and both individuals need to be well-informed. Many problems — especially when it comes to money — stem from lack of knowledge.
- When a financial issue comes up, ask yourself: Is it really a money problem or is it a relationship problem?
- Money should not be used as a weapon against your partner.
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