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Tag: Marriage

2 Important Tips on How to Manage the Household Finances as a Couple

Written by support@seostats.com on . Posted in Budgeting & Money, Financial Planning.

Often, married couples will divide and conquer tasks as a necessity to get their family to-do list done. Yet, when it comes to finances, this notion of “dividing and conquering” may not be your best bet in the long-run.

As Veronica Dagher of The Wall Street Journal points out, a financially disengaged spouse can actually prove quite costly to your household finances and potentially diminish long-term returns.

 

Team Effort

Instead of making the household finances just one person’s responsibility, it needs to be a shared responsibility. This does not mean that the spouse who is less interested in the household finances suddenly needs to become a financial expert. What it does mean, however, is that both spouses actively participate in setting financial goals, hold each other accountable to meeting those goals, and have an understanding and agreement about where money is spent, saved, invested, and prioritized.

So, how can you manage the household finances as a couple in the way I’ve described? Here are two ideas that have worked for me personally and with many of my clients that I have helped navigate the dual partnership of household finances.

 

1.       Learn What You Don’t Know

You don’t know what you don’t know. Make financial education a priority and something you seek out on your own in the way you most like to learn new things. Maybe you will find a financial podcast (check out Kent on Money) while your spouse orders a few books off Amazon (I highly recommend The One-Page Financial Plan by Carl Richards). Sharpen your financial acumen individually so that you can both bring important understanding and insights into your discussions and decisions about money.

 The reason why I don’t recommend that the more financially knowledgeable partner assume the role of financial educator is because it can (and often does) lead to arguments.

 Another great way to learn is by asking questions of your financial advisor. Your advisor should avoid jargon and be able to explain concepts clearly. If they can’t, it may be time to look for a new relationship.

2. Don’t Step On Each Other’s Toes

It’s not about switching roles. I find that most spouses that take the lead in the household finances do so because they are genuinely interested and enjoy investing and planning. Whereas, the other spouse is generally interested in assuming other roles and responsibilities, which is probably just one of the many reasons that makes you such a strong team.

Therefore, when both partners come together about the finances, it’s not about taking over a task or role that has been traditionally held by the spouse who has been primarily managing the finances. It’s about creating a new role and possibly adjusting existing roles so that there is room for everyone to participate. By doing so, you create an environment in which both people in the marriage can feel comfortable making decisions about money.

This is why it is so important not to step on each other’s toes. If you are the spouse who was formerly disengaged about the finances, I would caution you against trying to take over jobs or change how things have been getting handled. That can feel very diminishing to your partner. And if you are the spouse who has always done the finances, try to not micromanage your spouse or tell them how to do things if they haven’t asked for that kind of direction. That can feel very patronizing to your partner. Instead, make space for each of you to figure out a new way of operating with both of you involved. Be open to how each of you think it could work best.

 

Conclusion

With a commitment to ongoing learning, much can be accomplished in a partnership that comes together on money matters. How you approach money as a team, the decisions you make together, and the goals you strive toward as a couple can make all the difference between your financial success or financial failure.

Getting Married? Have This Conversation Now

Written by support@seostats.com on . Posted in Budgeting & Money, Financial Planning.

Incompatibility about finances is one of the leading contributors to divorce in the United States (source). Therefore, getting on the same page about your finances now before you get married is just another great way to prioritize your relationship and help safeguard it against potential disruptions down the road.

Perhaps you experienced the all-to-familiar money arguments in your own household growing up. Did your parents have conversations about money or full out fights about the finances? Sadly, it’s not uncommon for couples to share the following accusatory exchanges about money, but it certainly can be avoided with a little practice and preparation.

“You act like eating out once in a while is going to bankrupt us both! I work and so do you, so why can’t we enjoy our lives? I don’t want to spend the next 40 years scrimping and living under self-induced poverty!” – Kristen

“How did you manage to spend that much again this month? I thought we agreed to a budget and here you are blowing it again. I’m telling you: we can’t afford Whole Foods, and you can do your own manicures!” – Mike

While the couple in this hypothetical dialogue are talking, they aren’t communicating effectively or productively with one another about their finances and ultimately what their priorities are.

When you understand and discuss your experiences and deepest beliefs about money early on, before the marriage, even couples with differing money mindsets can find a happy middle ground. Here’s how:

 

5 Important Financial Topics to Cover Before You Get Married

 

Topic #1: Understand Your Money Scripts

Everyone has a money script, an unconscious belief about money that affects your behaviors and attitudes about money. There are four money scripts that most people fall into. Take the time to understand which money script you are and which one your partner is so that you can address how you will deal with potential conflicts when they arise:

Money Avoidance – These people have a lot of negative feelings about money and often worry about running into financial problems. This can cause them avoid spending or taking advantage of opportunities for fear of something bad happening.

Money Worship – People with this money script love money and the pursuit of it. There can never be enough money and this can result in discontentment around finances.

Money Status – These people assign self-worth to the amount of money they have and the things money can buy.

Money Vigilance – These are your financial contrarians. They are the avid savers and are always ready and prepared for the “what ifs” in life that can cause financial distress.

 

Topic #2: Explore the Ways Money Impacts Your Relationship

Once you understand your money script, explore your differences and agree how you would like to work through them as a couple.

Those with money vigilance can become overbearing with their supervisory attitude towards their partner’s spending, while worshipers can wreck the budget with their spending habits. Anticipate what may cause arguments and get on the same page with how you would like to avoid these issues altogether and productively address them when issues to inevitably arise.

 

Topic #3: Discuss What the Two of You Are Building Together

A marriage is about building a future together, which includes the financial goals you set for yourselves. Talk about your goals and how you’ll reach them together.

The beauty of this is that once your goals are aligned, your behavior should change accordingly. The money worshipers of the world may curb their expenditures when they have a clear goal in mind, while the money vigilantes might ease off on the nit-picking if you’re both making good progress toward shared goals.

 

Topic #4: Make Clear Your Expectations, but Adjust Accordingly

Set your roles and responsibilities together: who pays the bills? Who manages the accounts? Is one of you expected to be the breadwinner? You may be surprised at your partner’s preconceived ideas, so get them all out on the table now, and make small adjustments if necessary so you’re both working from the same set of blueprints.

 

Topic #5: Decide Whether to Merge Your Accounts

Should you pool all your money in joint accounts? Keep them separate? There is no right answer. It really just depends on what will work best for you as a couple. If you decide to merge accounts, you can open a joint checking account just for paying bills or to aggregate all your resources together. If you want to keep separate accounts, you may decide to divide up the bills between the two of you and cover expenses that way.

In the end, it’s about having good communication and coming together as a couple to decide how you will work as a team on your finances.