Regardless of income level, most marriages experience at least some stress around finances. Many relationships have been completely destroyed and divorce attorneys contacted simply because the couple couldn’t overcome the stress of a bad financial situation and bad money management. While marital bliss depends on so much more than just sound finances, it’s certainly a huge step in ensuring your future together will be long and unblemished by the problems that grow out of financial trouble. Here are a few cooperative money management tips I’ve learned throughout my married years, all of which were spent as the family “bean counter.”
Talk openly about finances
It all begins with freely discussing your financial situation, where your money is going or needs to go, and fully disclosing past debts to your partner. There’s nothing more stressful in an already financially-stressed marriage than to find out that your partner has been hiding old collections, bounced checks, or deficiency judgments that will eventually catch up with them, sometimes years later. Both partners need to know how much money is coming into the household or, in the case of those who decide to keep finances separate, how much money each will contribute to household expenses.
For varied and unknown reasons, a lot of people feel uncomfortable talking about money and many preventable issues crop up as a result. If there are children in the house, open financial discussion has the added benefit of familiarizing them with money management. This will help them become better equipped to avoid financial trouble in their own households in the future.
Work together on a budget
All money management has to begin with a good, solid budget that is a monthly average of ALL expenses throughout the year. If you think you have a balanced budget but still keep running out of money, chances are you missed one of the hundreds of cash leaks that exist in every home. Re-evaluate your budget until it accurately reflects all spending avenues.
Budget re-evaluation done together on a regular basis to make sure you’re staying on the right track can nip problems in the bud that might otherwise have time to fester into a real issue. Make sure that you and your spouse both know where the numbers on your budget are coming from, and both agree that it’s a feasible plan. Find a plan that you both agree you can stick to that will keep you within the budget every single month, and ideally that will allow you to put money away in an emergency savings account.
Designate the official “bean counter”
In most marriages, there is usually one spouse who is better with money, better at staying goal-oriented and enforcing a budget, or just has more time to deal with managing the household accounts. If both partners attempt to do this, you’ll end up with a huge mess that neither can understand. It may increase stress levels rather than reduce or eliminate them. People don’t often like to think of marriage or household as a business, but it certainly is in finances — so pick a money manager.
You and your partner need to discuss which of you is best-suited to manage the money. That person is solely responsible for making sure the bills get paid out of the household pool and keeping track of budgetary expenditures. The money manager is also responsible for scheduling joint budget re-evaluations. In addition, this person gives recommendations on if the family can afford a vacation this year, initiates the discussion about where any investment funds will go, and safeguards the emergency fund against frivolous or impulsive spending.
Do what the “bean counter” says
Having an official money manager in the house won’t do one bit of good if you don’t both agree that that is the person who controls allocations, and that person must have the necessary tools to do the job effectively. The non-money manager partner has the responsibility of informing the money manager of paycheck amounts, expenditure amounts and types, and asking for budget balances before spending money. You both agreed on this budget, now you have to keep working together and communicate what’s going on in the finances and what each person in the house needs to do about it.
Keep track of individual spending
Apart from all of the necessities of the house, each partner should have at least a small amount of money to spend on themselves, regardless of whether or not they’re a paycheck earner. Many couples choose to have their own personal bank accounts for their spending allowance, which is often the best method because it allows each person to save or spend their money without fear of it being spent elsewhere. Too often, people feel like they must spend the discretionary fund quickly so that they get what they want before their partner spends it all, or feel that they just can’t afford desired big-ticket items because they can’t seem to save enough discretionary money to buy it. Even if it’s not in individual accounts, it’s important to earmark that money as “wife’s spending” or “husband’s spending” and not let it be used for anything else, or ask for it from the other person.
Agree on goals for the future
An emergency account is the first priority in any financial plan, and setting aside that 10% every month is a crucial habit. However, once the emergency fund is established – it’s recommended that it should equal 3-6 months of total household expenses – then that 10% can go to other parts of your life. When the time comes, you and your partner need to decide what goals you have with that extra money. Do you already contribute to a retirement plan? Are all your debts paid off? If not, that’s probably the first place to start. Would you like to be able to go on that dream vacation? Buy a new house? Take up a hobby you both can enjoy? Invest? Decide what’s most important to both of you for the future, and start saving up for those goals. Another of the biggest enemies of happy marriages is stagnation, and having clear mutual goals in mind and being able to see definite progress toward them will help you both feel accomplished, and like there’s infinite possibilities for the future.
Overall, as with anything in a marriage, good financial management comes from consistently working together and trusting your partner. Once you can do that, it’s possible to work together as a team to move forward.