This post is all about how couples can adopt healthy financial behavior toward achieving short- and long-term goals, toward financial freedom.
Everyone dreams of being financially free, but finances, even on a personal level, can be challenging, so most individuals find it hard to adopt healthy financial behavior.
To thrive financially, couples require great discipline, which entails living within their means and creating a monthly budget that seems to be tedious.
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As difficult as this may seem, it is much harder to maintain good financial habits while in a relationship. Money is the second most prominent reason for divorces, and a significant cause in most arguments couples have. This is to be expected since both parties in the relationship come from different backgrounds and have had different experiences with money.
This does not mean that couples can’t live in a relatively peaceful relationship with minimal fuss sparking from poor financial decisions. The article will take you through several steps couples can take to split their finances more amicably.
Understand each other’s money mindset
Believe it or not, all our spending habits are driven by an underlying set of beliefs and attitudes about money that have been taught in our lives since we started interacting with money. These beliefs are what we refer to as the money mindset. They are formed at an early age and greatly influence the level of financial freedom you will be able to achieve either individually or as a couple.
If you realize that your financial mindset is a hindering factor to actualizing your life goals and dreams, you can easily reset it with a committed effort to acquire a better mindset.
Each individual in the relationship will have a different money mindset, making it hard for the couple to wrap their heads around their financial decisions. This is why each couple needs to sit and discuss their perception of what money means to them and how they justify their spending.
This may seem like a simple discussion, but it will require constant communication between the money mindset changes with time. This is also an excellent time for the couples to talk about what goals they wish to achieve together since this will aid them in better understanding what drives their partner financially.
During this step, it is advisable to take your partner’s reasons and perception of money in an understanding way. Do not try to shoot each other’s ideas down but treat it as a discussion and not a battle of wits. You will have to compromise when it comes to certain areas. After all, a relationship majorly consists of gives and takes.
Aligning your goals and setting a new mindset
Once both parties understand what drives the other to make their financial decisions, you can proceed to the next stage of coming up with a new money mindset that will enable the relationship to grow financially. This step is not easy and requires both individuals’ significant level of understanding and patience. Everyone will have to compromise on something for a level ground to be achieved.
First, each partner needs to come up with a new monthly budget. Most people do not enjoy coming up with a budget every month, but a budget is a must for a new couple or any couple seeking to argue less about finances. This will help you stay in line and live within your means, and it will also be an excellent way to change your money mindset. Try using an app like EveryDollar to help you manage your budget.
Do not view a budget as a list that tells you what you can and cannot do. Instead, think of it as being in control of your money and not your impulses controlling you. Having a family budget will be easier for both of you to share the monthly expenses. This structured approach to how the couple handles their finances will build financial trust and reliability and make the relationship even more enjoyable since you will argue less about money.
Another crucial issue that needs to be addressed is the issue of financial infidelity. This refers to going behind your partner’s back and making purchases without informing the other party. This is a common financial problem that many relationships face, leading to complete mistrust and even divorce. So to avoid this, always discuss significant purchases with your spouse first. As the saying goes, prevention is better than cure.
If you wish to improve your mindset more, you can start reading books together and expand your knowledge on the matter. It can be fun to read it as a couple and discuss the ideas you will gain from the books and how they apply to your financial situation and goals.
Create a Joint Account
Once you have come up with your monthly budget as a couple, you can move on to the next huddle, which is how much each party will contribute. It is highly advisable that you split the expenses proportionally according to your salaries. For example, if one individual makes $60,000 and the other makes $40,000, then the one with the higher wage should pay about three-fifths of the monthly budget, and the other produces two-fifths. This allocation will be fair since no single individual will be exploited.
Creating a joint bank account for your expenditures will make it easy to save up for your budget. You can quickly adapt your new month’s budget according to the amount of money available in the account. Joint accounts create a sense of trust since every expenditure concerning your relationship or family is open. There are limited ways for one individual to misuse the collective funds.
The joint account can also be used to save for emergencies. It is always a great idea to have an emergency fund that will ease the situation for you in such times. An emergency fund will enable you to continue with your day-to-day spending despite the prevailing times. So both of you can focus your energies on addressing whatever crisis you are facing with minimal distractions. The amount of money you will have to save up will entirely depend on what you agree on and your monthly spending. A full emergency fund should cover the living costs for at least six months.
As you can see, being in a relationship means you will have to communicate what to do and how to do it. Finally, you should have a way to track spending. It is not enough to have a budget; you will need a way to stay accountable for how you spend your money. You need to record all transactions you have made and analyze them later when preparing the next budget. It will identify what you need to reduce expenditure on.
Keep your Accounts
If you are wondering if you should keep your account once you get into a committed relationship or marriage, the answer is yes; you should keep them. No matter how great the understanding between the two of you is, you should each keep separate accounts. These accounts will be used for your expenditures. As much as you are supposed to act as ‘one,’ you need to be able to make certain purchases without having to consult one another, like gifts for one another on holidays, anniversaries, or birthdays.
During the stage of understanding the other’s money mindset, you may discover your partner may have certain spending habits they are unwilling to give up for one reason or the other. It is wise for the sake of the relationship to compromise on such. Individual bank accounts can be used to finance these purely one-sided spending habits.
For instance, your spouse may be tech-savvy that have a great urge to try out new technologies from time to time. An expense like this might make more sense to come out of a personal account, compared to a joint account. This will give both of you room to do what makes you happy and avoid the feeling that you are chained down when it comes to your own money.
So as you are planning your finances together, leave a portion of it, 5-10%, free for your spouse to use as they see fit. This will be great since the saver will be able to save it, and the one that loves spending their money will entertain themselves—leaving both parties happy and content on a personal level. Just like the joint account, you will be sharing, you also need to track the transactions on your account. This will help highlight what you need to work on.
A great way to manage how you use your bank account is by saving up for something rather than just withdrawing money on impulse. This way, you will have more time to think about your purchases and decide whether or not the purchase is necessary.
Plan your future together
The most important part of being in a relationship is ensuring you involve your spouse in everything you do in the present or future. This is what you sign up for when you say the vows, and it is a beautiful venture that both of you should undertake together and include each other in every step. Things that a couple ought to plan together have your retirement and investments.
It is a good idea to plan for your retirement together. This way, the retirement will be fulfilling for both of you. You should all sit down and discuss what you think a good retirement home should look like, where it should be located, and eventually come up with a plan to make this dream a reality. You can open a joint account separate from the other joint monthly expenses account. This will ensure you do not dip into your retirement funds by mistake.
Another critical area to address is your portfolio or your investments as a couple. A couple seeking a future that promises financial freedom needs to consider what they wish to invest in. The investment options should be in areas either one of you has the experience and knowledge in or hire an expert in the industry or field you are interested in. So if you do not know financial markets or cryptocurrencies, avoid investing in them or securing the services of a professional. Doing this ensures that the investments are safer and have a higher return on investment. You are not limited to only this; you can choose to start a business together if that is more of your speed.
Creating an account for your children’s education is always a good idea for couples planning to have kids or already have kids. College is quite expensive, and planning for it can save you a world of financial trouble when the time comes. You will both have peace of mind and focus on growing your wealth. Your child’s future will be secured whether or not you will be around or not.
Speaking of kids, you are in charge as a parent meaning you should not be influenced by your kid’s desires. By this I mean, that even though your child requests something from you, you should critically assess whether the item in question is worth purchasing. You should not be overly strict in buying them stuff either. Strike a balance between necessity and extravagance. Spoil them once in a while when the budget allows it. The couple can plan a budgeted vacation together to blow off steam.
You cannot separate love and finances as both require to be approached in a united manner to make a marriage or committed relationship work smoothly. As you have seen from the discussion above, finances need both parties’ great deal of effort and compromise. When both parties are committed to ensuring that they have an excellent financial status, they can communicate efficiently. Two heads are better than one.
By creating joint accounts for monthly expenditures, retirement plans, emergency funds, and education funds, a couple will avoid having unnecessary arguments. Finally, a couple needs to invest together to grow their wealth.
If you follow these tips, you will have a financially peaceful relationship.