Managing your money well is no easy task, and it can be doubly difficult when you become married or enter into a common law union. You’re now having to sort out expenses and budget effectively for a household rather than for an individual.
Depending on your prior circumstances, you and your partner may have had different experiences with money. You’re also likely bringing diverse budgeting skill sets into the relationship. Since decisions about money often have to be made daily, making those decisions jointly can be a challenge for couples.
Read on for some helpful tips for managing money as a couple from our GBTI banking experts.
1. Begin with Honesty
Money can be a touchy subject. Some people find it relatively straightforward to discuss their finances, while others are reluctant or become anxious. Think honestly about what money means to you. Do you value having the spending power acquire nice things or is it satisfactory just to have sufficient funds to pay the bills and put food on the table? Do money worries have you up at night or is your financial health rarely a source of stress? Be as clear and truthful as you can with your spouse.
2. Recognize Differences
After opening up to one another, you’ll probably discover that you and your spouse or significant other have some different feelings and expectations on the topic of finances. This will involve decisions about how to spend, save, and invest your wealth. In addition, one of you may feel much more comfortable handling the family budget. Note where you differ and where you can find some common ground for agreement. You don’t have to have everything figured out at once—just enough to begin the budgeting process.
3. Be Compassionate
Take some time to understand where your partner is coming from. What was their exposure to money management growing up? Did they benefit from solid financial literacy training or were they shielded from discussions about money? If they have difficulty talking about budgeting, it could be that they witnessed their parents having financial troubles or disagreements.
4. Decide on an Approach
The next step is to figure out your money management approach. Many couples who bank at GBTI have joint checking and savings accounts. However, you may decide to keep your GBTI accounts separate from one another, or have a joint account for common expenses and individual accounts for personal spending and saving. If you have individual investments or bank accounts, be sure to designate a beneficiary.
5. Play to Your Strengths
If one of you is better at handling the family budget, it makes sense to have that person take on the responsibility. Some people have a natural aptitude for dealing with finances and know how to spend and invest wisely. They may also thrive on looking for deals and ways to stretch dollars for more buying power. Play to your strengths as a couple while making sure that you are both aware of your budget details and in agreement with all financial decisions.
6. Build in Flexibility
The best budgets have some flexibility built into them for contingencies. Whether it’s rounding up regular expenses to the next few dollars to provide a cushion for price changes or slowly building an emergency fund to prepare for large unexpected expenses, take care to use a few proactive budgeting practices. The more prepared you are for increases in living costs and emergencies, the more trouble-free your money talks will be.
7. Review Regularly
Your financial situation will change over the course of your relationship. Hopefully, your situation will improve with job promotions, profitable investments, and increased expertise in managing your funds. Having said that, the opposite can certainly happen, and you may struggle with your finances at times due to various adversities. By regularly reviewing your budget and financial goals together, you’ll make sure that you are on track and make adjustments as needed.
8. Make Room for Mistakes
Making mistakes with money cannot be avoided. You might forget to pay a bill, overspend on holiday, not set aside sufficient funds for repairs on an older vehicle, or commit a more serious oversight. Poor financial decisions don’t need to lead to anxiety and guilt. Just use it as a learning experience and move on. Remember, if you start to find yourself out of your depth, GBTI can help.
Finally, don’t forget to celebrate your successes. After putting in place the above strategies and experiencing the advantages, it’s important to celebrate the fact that you’re working as a team to manage your money.