Financial problems make up one of the leading causes of divorce. The emotional effects of money impact the quality of life for both partners — and fighting about money adds a layer of fear and uncertainty about the future.
After sitting at nearly 1,000 couples’ dinner tables and talking about money, there is one thing I have noticed. Couples who manage their money together are closer. Their goals and dreams are more aligned and they know more about each other’s everyday life. Here are some tips to get your family finances in order with a significant other.
My Account, your Account, our Account
The first step to bringing your finances together is to have a joint bank account.
When you go out to eat, shop for groceries or pay other household utilities, this would be the main family account to pay those bills. This allows you to get rid of the “my money/their money” mindset. This account should be where the majority of everyone’s paycheck goes and it can be used for the majority of household expenses.
If you and your partner are operating out of one account, being on the same page is extremely important. For example, you don’t want your partner to write a check for a bill you just paid. It may be hard to sit down and pay bills together, so the best way to prevent this is to have one person be responsible for paying the bills. Usually, there is one person in the relationship who is more inclined to this type of activity.
If you are the bill payer, please relinquish this task at least two times a year. Make sure your spouse or partner knows what to pay, when to pay it and how to pay it. If you are ever unable to pay the bills, they must know what to do. It also creates a touchpoint for the two of you.
You can still have two separate accounts, which means two additional accounts — one for each of you. This will let you buy gifts for each other and keep them a secret. It will also allow you guilt-free pleasure spending. With this method, you can go to lunch or golf without worrying about the household finances.
If you are planning a big vacation or a home remodel, make sure you save as a team.
Open one savings account for this goal and work toward it together. On the mechanical side, simply determine the cost and put a portion of it away each month. If in 10 months you will spend $5,000 on a vacation, put away $500 each month. Watch it grow and get excited together; nothing brings couples together as quickly as working toward a mutual goal.
Prepare for Anything
Put together your own “financial bomb shelter.”
This means having an emergency binder, which should include a detailed list of all accounts, beneficiaries, insurance policies, and any other necessary documents. Include your list of online accounts and their login information. If an emergency occurs, all the information you need will be in one place.
Talk About It
The truth is that discussing money can be very emotional.
Talking with a partner we adore often is harder than talking to someone with whom we have no emotional connection. We desire not to show our flaws and disappoint our spouse, so then we don’t talk about money. Create a time where you sit down together and talk.
Finances can be used to grow your relationship. When you work together to achieve a financial goal, you will come together in ways you have never experienced before.
Michael Kostelnik is the founder of Family Life Financial Planning and specializes in financial planning for Gen X and Millennial parents. For more information, including the Family Life Financial Planning blog, visit saveforyourfamily.com.
I enjoyed reading your article entitled “Tips for Managing Your Finances With Your Significant Other”. It is straight forward and logical advice for most couples. I’m seeking advice for retirement planning.