Managing your finances can be difficult on your own, but adding one more person can make it even more of a problem. The stress and tension associated with couples and money management are among the leading causes of divorce in the United States.
According to Forbes, conflicting money management styles can be destructive for couples. When one person is a saver and the other is a donor in the relationship, arguments can arise about where the money goes. However, if you are preparing to pool your finances or if it has been a constant struggle, we’ve rounded up some tips for couples and money management.
1. Talk about relationship money goals
It is important that you sit down with your partner and discuss your overall monetary goals. What financial goals are you saving for? How much do you want to put aside? Would you like to retire early and move to the country? Are you working to get out of debt? These are important questions.
That way you can communicate what you envision for the future and work towards developing a common goal. If the two of you have different long-term goals, that’s fine. Talk about what the two of you want and find out how you can work together to make relationship and money management smoother.
2. Discuss shared spending and budgeting
You both need to be on the same page when it comes to managing your finances. Do you have separate accounts? or do you officially combine your money with a joint account? Split bills; or does one person take on this responsibility? What about a household budget?
Sit down with your partner and create a realistic budget. The NFCC’s 2019 Consumer Finance Literacy Survey found that only 40% of Americans have a monthly household budget. A budget is a proven way to stay financially organized and on track. Revise your household budget frequently to make sure that you as a couple are achieving your financial goals.
3. Be open to debt and spending
It is critical for couples and money management to be honest and straightforward about debt and spending. You are not responsible for your partner’s debts, but you must be aware of their financial obligations when pooling finances. Even if you are not liable, you can sit down and come up with an actionable plan for dealing with debt and other expenses.
4. Have the credit interview
Most couples do not immediately discuss their credit scores or credit history. It usually occurs when you move in, but credit talks are never a top priority. While a lower credit score isn’t a deal breaker, with similar credit scores, you’re more likely to have financial habits that are more closely matched. However, merging finances with a partner who has low or poor creditworthiness can affect your ability to get affordable finance through joint purchases.
Make it your goal to conduct the credit interview. When a person has a low credit score, work together to determine the financial habits that caused it. Team up to improve the lower credit score.
5. Plan for retirement
Inevitably, if you plan to spend your life together, you will inevitably discuss retirement plans. Retirement planning is a key long-term goal of money management. Make sure to discuss the following:
- What are your expectations and what kind of lifestyle would you like to live after retirement?
- If you are planning to move or downsize your home
- When you want to stop working
- Saving strategies and choosing the right retirement plan to build your nest egg
Couples and money management
Communication is crucial when it comes to couples and money management. Discussing finances isn’t exactly fun, but learning how to talk to your partner about money management can help avoid future arguments and stress.