Finance as a couple: If you’re reading this, you and your partner are likely in one of two situations: preparing to get married or already married but arguing about money at least occasionally. Whatever your circumstances, it’s essential to think about your finances as a couple and work on them together, rather than keeping them separate. When it comes to money matters, here are some steps you can take to make sure you handle finance as a couple the right way.
Understand Each Other’s Goals
Before successfully managing your finances as a couple, you need to understand each other’s goals. What are your long-term financial goals? Do you want to retire early? Are you trying to save for a down payment on a house? Once you know each other’s goals, you can start working together to create a plan.
Keeping Good Records
Good record-keeping is essential for any business, but it’s vital for businesses run by couples. Not only will it help you keep track of your expenses and income, but it will also help you keep track of your progress as a team. Plus, good records can come in handy if you ever need to prove your business ownership to the government or a bank.
Avoid Joint Credit Cards
While getting a joint credit card with your partner may be tempting, it’s not the best idea. This is because if one person racks up a lot of debt, the other person is on the hook for it as well. Plus, keeping track of spending when you have a shared credit card can be challenging. It’s better to keep your finances separate and just have one account that you both contribute to.
Pay Attention to Changes in Spending
Before you and your partner combined finances, you were each responsible for your own spending. Now that you’re sharing expenses paying attention to any changes in spending habits is essential. If one of you starts spending more than usual, it could signify financial trouble.
Small changes can snowball over time, so be alert for your financial problems. If you feel your partner isn’t being open and honest about his or her spending habits, consider keeping track of each person’s expenses in their own accounts. That way, if financial trouble arises, you can go back through individual accounts and identify problem areas later. You can also set limits with budgeting software like Mint to prevent overspending by either of you.
Build an Emergency Fund
Couples need to have an emergency fund because it provides a safety net in case of job loss, medical bills, or other unplanned expenses. Try to have at least three to six months of living expenses saved so you’re prepared for anything life throws your way.
If you have enough in your emergency fund, you can always devise a new game plan if an unexpected expense pops up. For example, if one of you loses your job, it’s not ideal, but it might be possible for that person to take time off and find something more stable while saving up some cash. However, if there’s no emergency fund, that individual would have little choice but to find another low-paying job until he or she could land something better.
Talk About Emergencies – And Budget For Them
No one likes to think about emergencies, but they happen. And when they do, it’s essential to have a plan in place, so you’re not left scrambling. Talk to your partner about what you would do in different scenarios and budget for them accordingly. This way, you’ll be prepared if the worst happens.
Create Separate Savings Accounts For Each of You
One of the best ways to manage finances as a couple is to have separate savings accounts. This way, you can each save for your own individual goals without having to worry about what the other person is doing with their money. Plus, this can help prevent arguments about money since you’ll each have your own account to manage.
Open up a new savings account in your name only to get started. If you and your partner live together, it’s also wise to set up another account at your bank that you each have access to but aren’t able to spend from. This way, if one of you loses their job or has trouble making ends meet, you can help them without worrying about dipping into savings for something else.
Create Rules Around Shopping
When it comes to spending money, every couple is different. You and your partner may have different approaches to spending and saving. One person may be a spender, while the other is a saver. Or, you may both like to spend money on different things. Whatever your situation, it’s essential to create rules around shopping as a couple. This will help you avoid arguments and disagreements down the line. Here are a few tips
Make a List of Your Spending Habits: Before you create rules around shopping, it’s essential to know where your money is going. Create a list of all your monthly expenses and add everything from rent and utilities to entertainment and shopping expenses. Include recurring bills such as rent, student loans, and one-time purchases like vacations or clothing. It may be hard at first, but try your best to estimate how much you spend on each item listed. Are there any surprises in what you spent?
It may be hard at first, but try your best to estimate how much you spend on each item listed. Are there any surprises in what you paid?
Make a Rule About Spending Categories: Now that you know how much you spend every month, it’s time to decide how much of your income will go toward fun and frivolous purchases vs saving and investing for long-term goals like retirement or buying a home. Your choice will depend on where your priorities lie at the moment.
Once you’ve decided how much of your income will go toward fun and frivolous purchases vs saving and investing for long-term goals like retirement or buying a home, it’s time to set boundaries on what types of items are allowed within each category. Create Guidelines Around Purchases Under $100: If you’re going to splurge on something special that costs more than $50, make sure there is 100% agreement between you and your partner.
Conclusion
Handling finances as a couple can be difficult, but it doesn’t have to be. Communicating openly, making joint decisions, and working together towards common financial goals can make managing your money as a team a breeze. So take the time to sit with your partner and talk about your finances today – it’ll pay off in the long run.