Relationships & Money: 5 Tips for Sharing Finances
Are you arguing with your sweetheart about money? You’re not alone. Finding a compatible spouse is paramount to achieving financial independence and freedom.
Did you know money is the number one issue married couples fight about and the leading cause of divorce? That may be why so many couples avoid the topic entirely - particularly in the early stages of a relationship.
Building a solid relationship takes time and work. But no matter how much you love your significant other, merging your lives and your money can be a challenge. Here are five ways to avoid the mistakes couples often make when it comes to their money and relationship.
1. Share Your Financial Secrets
Don’t wait until you’re engaged or married to address concerns about spending and saving. Some people are willing to shift their behaviors and change, while others are not. If you can’t navigate these difficult topics before your lives are entwined, odds are it won’t get much better over time.
Start by trading financial statements with your partner. This means sharing everything from your income to your debts. Begin by tallying up what each of you owns — and owes. Your assets should include things like your savings and retirement accounts. Your liabilities may include student debt, a car or business loan, credit card balances and even mortgages. If you can’t handle these conversations on your own, work with an unbiased money coach to help mediate the conversation.
2. Embrace Co-budgeting
Determine how you've been managing costs, from ordering pizza for dinner to your individual retirement contributions. Start by reviewing your joint expenses (housing, utilities, vacations) over the last few months to determine how much you’ve been spending and if you need to bring that amount down.
Regarding bills, even if you both work you may not want to divide the expenses down the middle. For instance, if you have the higher salary, you might take full responsibility for the housing costs, and your partner could cover the other monthly bills.
Some couples find joint bank accounts are the easiest to manage. But maybe you as a couple will decide to keep individual accounts — and dually contribute to a joint account to save for larger purchases.
3. Yours, Mine and Ours Spending
Everyone needs some financial freedom even in a relationship. Frugal partners can tend to question the spendthrift partner, even on smaller purchases. This can gradually destroy trust and intimacy.
Once you've decided how to share joint expenses, allow each person to spend their remaining funds as they see fit. It's also a good idea to set a spending limit for big purchases in which you need to discuss the expense with your partner.
4. Discuss Your Values
Each person has a different take on money. Some are cautious, some are penny-pinchers and others like to spend freely. There are those who like to work on a budget, while the partner is completely frustrated by the idea. Each partner should know the financial philosophies of the other and delve deeper to understand why each of them has that particular opinion on money and if they must alter it a little for the benefit of their relationship.
5. Keep Each Other Accountable
Once you find a middle ground, make a commitment to stick to it for the long haul. If one partner strays from the agreed path, it is the other's responsibility to politely help get their loved one back on track. If you ignore these missteps, one or both of you is going to end up frustrated and angry.
To avoid this, set up a regular meeting to track your progress towards your shared goals together. This may sound a bit formal, but it’s a good way to stay on the same page and keep each other motivated.
In conclusion, work towards having common financial goals in your relationship and life will be a little sweeter!