Managing Money as a Couple
Managing money as a couple can be challenging to navigate. Which is why we’re sharing our story, and professional advice, for other couples.
Our journey to a healthy relationship with money and achieving Financial Freedom, actually started with our personal relationship as a recently engaged couple back in 2015.
Even back then we knew that arguing about money can ruin relationships, so Rebecca and I started having conversations about our finances.
In order to both see progress and avoid money fights along the way, we needed to be transparent and work together to overcome challenges and reach our goals as one.
When we started taking an inventory and assessing our Financial Health, the numbers weren’t great. I had four times the amount of debt than Rebecca and she was making more money than I was. We were already having to face some very uncomfortable truths.
While looking for how to navigate the difference in financial position, at the time we were engaged but not married. So it was important for us to work together, while also maintaining our independence. It was a balance of reaching our goals without acting prematurely, limiting frustration, bitterness, or feelings of unease.
As we had discussions about finances it quickly became clear that we had different beliefs, thoughts, and concerns about money. Another thing we would have to be sensitive and aware of when building our strategy and deciding how to overcome obstacles.
Why Couples Need to Manage Money Together
Regardless of your relationship status, what’s most important is understanding the connection between financial wellness and a happy, healthy relationship.
When money is managed well, and you have transparent conversations with respect and the right mindset, financial stress becomes less of a burden on your relationship.
But on the other hand, the negative side effects of money in a relationship are very real.
With over 70% of Americans reporting that they are stressed about money and more than 20% of marriages in the U.S. ending in divorce are caused by financial strain or infidelity. It’s easy to see that this is a problem felt by the majority of couples.
So proper money management is crucial for building a life that lasts, together.
At the heart of all of this advice here is open and honest conversations about money.
These conversations can be difficult for so many reasons. You and your spouse likely had two very different experiences with money.
Some families are open to talk about finances, while others less so. Some families struggle, others have extra.
All of this to say, when two people are coming together, so too are their very different experiences and points of view. It is important to honor and remember that throughout the process.
That said, the first step to help you start these supercharged conversations, is to create a space where it’s okay to discuss money in a judgement-freeway.
The goal of coming together and talking about money is to improve your life, relationship, and ultimately build a legacy. But we all make mistakes. If you want to grow a future together, dwelling on the past is not going to help.
It is also worth noting that financial and legal professionals across the board agree that it is best to wait until you are officially married to combine your finances. Please keep that in mind as you read along.
How to Manage Money as a Couple
Have Money Dates
Budgeting is something every couple should do together. This helps you avoid one person feeling like they don’t have a say or they are being told what they can or cannot do with their money. It’s an opportunity to sit down and discuss how you get to spend your money together. How you use your money should not be a divide and conquer the task.
Money dates might sound boring, but that’s all on you. Here are some of our favorite ways to make them fun! Make a nice cup of coffee or pour a glass of wine, turn on some mellow music, and eat yummy snacks. Essentially create an inviting and calming space. When you’re ready to get started, talk about your goals first! This will help you get excited about what you’re working towards before you start to review the less exciting details.
At the end of every month, sit down and review how that month has gone. Example: If it’s April 30th, do a final review of April. Using information you notice from that monthly review, make a plan for the next month.
This is the time you talk about your goals as a couple. Each person should feel empowered to weigh in about what’s important to them. There will be compromises, but both of you need to participate and agree on the end result.
As you go through the month, have weekly check-ins. This is an opportunity to review progress in real-time and allows you to both agree upon any changes that need to be made to the original plan.
PROTIP – Never spring a budget date on your spouse and never have the meeting at the end of a stressful day. Money conversations can be difficult enough. So plan to have the conversation at a specific time and reschedule if necessary.
Open a Shared Bank Account
For us, marrying our finances made it easier to make progress toward bigger goals – aggressively paying down debt, saving emergency funds, etc.
We like this approach because it keeps things simple, we have fewer accounts to manage and that makes it easy to track all of our income and expenses from one central account.
By doing this, you will have more money to leverage each month and you will feel far more confident and secure about your finances when you start to see both paychecks hit the account every month.
Alternatively – a growing trend with millennial couples is to maintain completely separate accounts, splitting bills, and Venmoing money back and forth. In our experience, that is a lot of extra work and creates more chaos than progress. But we feel it is important to note that, if your goal is to protect assets, in almost every state separate bank accounts do not protect you or your spouse in a divorce.
Have a Vision and Set Goals
Every couple has a vision for what their married life will look like and what they want to achieve together. Most of which involves money…
Buying a home
Building a family
Starting a business
Going on awesome adventures
Retiring in style
Having common goals and working toward them together is one of the most powerful things you can do in your relationship. But without having conversations with your partner to set goals and make a plan, you leave it all up to chance.
Use your budget meetings as an opportunity to check in and benchmark your progress towards those goals. [ Not sure how to set effective goals? Read this. ]
Equally as important, is to set goals as individuals to nurture and fill your cup so you can bring your best self to the relationship. For example, I have a passion for rock climbing, and Rebecca enjoys travel and exploring new places. We make sure to give each other the time and money to do things either with or without the other person.
Which brings us to our next point…
Set a Personal Spending Limit
A personal spending limit is a set amount that each person can spend without needing to discuss it first. Setting a spending limit means you never have to “get permission” for making a purchase within this set amount. If and when something you or your spouse wants costs more than your personal spending limits, it’s time to come together and discuss the purchase. But your personal spending should not always require a budget meeting!
So how do you set the personal spending limit?
This will depend on a lot of things, but as long as you are paying the bills and making the agreed upon progress towards the goals you set, it’s up to you! It could be as little as $50 or upwards of $1,000 a month, it really depends on your situation.
Throw away the Scorecard
Keeping a scorecard is a great way to sabotage progress and annihilate open communication about money management. In fact, if a significant other does this too aggressively, that could be a warning sign of some really toxic financial behavior.
But there are a lot of reasons couples keep a scorecard that isn’t always nefarious. One person in the relationship might have more of a scarcity mindset, or view money as security and want to hoard as much as possible. Someone who comes to the relationship with a lot of debt may be trying to control what they feel they can. There are a lot of mindset and psychological things that may cause someone to behave this way, but no matter what it’s usually unhealthy.
So whether or not one person never spends their personal money, while the other spends most if not all of their money, it doesn’t matter. This is true in our relationship and guess what, it’s no big deal!
As long as you are working together as a team. The only scorecard you should be keeping is how you and your spouse are working together to reach your goals – paying off debt, increasing your net wealth, and reaching financial freedom.
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