The following is an article “Relationships and Money” by Marc Primo.
Whether you’re in a serious relationship or already starting a family, it’s always necessary to discuss your financial status with your significant other before moving forward to anything far more serious. You both have to open up and be honest, even if things get a little uncomfortable and unromantic. One of the common mistakes newly-weds and long time partners make is not talking about money or how they should manage their finances, together.
To help you and your significant other avoid falling into relationship-killing financial faux pas, follow these five simple rules:
Set a common goal. Here’s the thing, you and your partner are two different people and you might have different approaches to managing your finances, on top of all the other things in life. But it is important to remember that you are partners and even if you cannot expect him to share the same mindset in life, you can still set a common financial goal for both of you, especially those long-term ones. Do you want to buy a house or get life insurance? Are you preparing to be parents or want to relocate in the city, or even move out to other countries? Being on the same page as your partner will help you set the proper financial mindset you both need to function smoothly as a couple.
Discuss each other’s spending habits. Lucky are those who instantly click with their partners when it comes to money matters, while others struggle to get both their relationship and finances in order. You may want to sit down with your partner early on and discuss your individual financial attitudes, spending habits, and future plans to better understand each other. Keeping an open mind and compromising on your differences are also important.
If you both have jobs and want to keep your own money, it might be okay as long as you both know your priorities and set budget assignments. Who is going to pay the electric and water bill? Who is in charge of rent and groceries? Whether you want to split budgeting 50-50 or open a joint account, that’s fine as long as you both decide and agree on it.
Update your records regularly (including living will, insurance, and debts)
Create an easy to understand system that you both can update regularly. Some couples create a shared spreadsheet or budget calendar to keep their finances in check. It is beneficial to form a habit of updating and maintaining financial records. Securing your documents such as a living will, debt records, insurance, and bank accounts is also an integral part of taking care of your family’s future.
Plan and agree on big purchases. Plan, plan, plan. You are building a future together and if you want to live life as comfortably as possible, it is crucial that you keep an eye on your purchases, big and small. More so with big purchases as it can affect your budgeting and future activities. You may want to consider building a long-term financial plan that you can always refer to.
Keep your savings game strong. Spending your hard earned money wisely is important but strengthening your savings is also crucial. You never know what the future holds and whatever happens, it is always better to be prepared to avoid being caught off guard. It is critical to ensure that your savings reserve isn’t empty in case of emergency. Make sure that you set aside part of your income for savings and other incidental uses. Some people even recommend at least a six-month cushion for contingency and to help you cover your expenses in case of unforeseen circumstances.
Managing your finances can be a huge pain but it truly is an essential part of keeping your relationship healthy. Always consider what works for you as a couple and as a family, and you should be good to go.