Financial Tips for Couples
Should we set up a joint bank account or have separate accounts? This is one of the most important decisions couples should make regarding finances. Having your own account with your own money to spend however you want can lessen arguments about money.
Having one joint account that you can both contribute to household expenses is a great idea. Some people think that you should have joint accounts for all money in a relationship or marriage. I don’t believe this is a good idea as I have been divorced and it made it much easier to split things up.
Track Your Spending
Budgeting or tracking your spending is a good way to keep things transparent so that both parties are aware of what is happening in the spending and saving part of the relationship. Tracking your spending is critical to being financially secure. By tracking your spending you can set financial goals that you both can feel good about.
By tracking your spending and knowing how much money you have you can setup priorities so that you both know what is going on. If one person wants to buy a car and the other person wants to save for a house it is good to know each other’s goals and priorities.
A financial planner can help set up priorities so you will both know where you stand. Set aside some money for fun and set aside some money for goals that you can share together.
Discuss Finances Together Regularly
Sometimes discussing money with a partner can be hard. One partner may view money as security and the other partner may view it as buying that new flat-screen TV. Topics such as debt, bills, savings, and goals may make one or both of you uncomfortable. One of you might be a spender and the other might be a saver.
Make sure you communicate. You may want to seek out a financial planner or counselor to help with any money issues you may have. Communication is paramount so that both of you know where you stand financially and can have common financial goals.
Save Some of Your Income
Couples living paycheck to paycheck often rationalize that they just don’t have enough money to save. Make the decision to save at least some of your income. 15% or your income is a good place to start. Do you really need 200 TV channels? Save enough cash in an emergency fund so you can both can survive for 3-6 months. Invest in your respective retirement accounts. The earlier you both get started the better off you will become retirement.
Fact:Two-thirds of Americans would struggle to scrounge up $1,000 in an emergency, according The Associated Press-NORC Center for Public Affairs Research.
Live Debt Free
Before you start investing you should consider becoming debt-free. People don’t usually want to wait for whatever they are craving for like that new car, clothes, TV, or the latest gadgets. They think they can put it on the credit card and pay for it over 120 easy payments. Why pay someone else interest at 21% when you can only make 2% on your savings account.
After you get that emergency fund set up, then pay off your debt, then you can start investing in your retirement accounts. One exception might be your 401K if your employer matches a percentage then you might want to pay into your retirement through your company before you pay off your debts. It’s basically free money so you should take advantage of it.
Don’t Keep Financial Secrets
Be honest about the cost of large financial purchases and don’t keep debts hidden. If you do these things it is considered financial infidelity by most people. Such secrets can destroy your relationship. Be honest with each other because someday you might have something difficult come up and you will have to deal with it.
Fact: Among adults who have combined finances in current or previous relationships, 2 out of 5 fess up to committing financial infidelity, according to the National Endowment for Financial Education.
It is nothing new that disagreements over finances are one of the main reasons couples end up in divorce court so be honest with each other and keep each other in the loop so that your financial life goes smoothly.