Fights over finances top all other issues for relationship woes.
Avoid being part of that dangerous statistic — follow these 10 tips to make sure money matters don’t ruin the good thing you have going.
1. Treat family finances as a business matter.
Agree to have a financial business meeting once a week at a set day and time.
Consider the best place to meet — perhaps in a coffee shop if that helps you focus.
Some meetings will be longer than others, but even a quick 10-minutes will make a big difference in working together and staying on financial track.
2. Put it all on the table.
Start out by putting all information on the table.
This includes all debt, all obligations, all sources of income, various types of accounts already existing, any property owned, and so forth.
Full disclosure is critical to build trust and work as a team.
3. Brainstorm dreams and goals, both short-term and long-term.
Do you want to take a trip? Buy a home? Have kids? Own your own business? Go on vacations? Build an art collection? Purchase a second home? Do you have specific retirement wishes?
Don’t limit yourselves to what you can achieve in the present – be curious about your partner’s desires and hopes. This exercise helps you get to know one another’s “financial temperatures” and styles.
4. Begin to build a simple budget together.
The best start is to merely keep track of all expenditures for a month or two. You can find simple online tools to make this easy, like our 50/30/20 budgeting calculator, which breaks down your after-tax income into three brackets:
- Essentials (50%)
- Wants (30%)
- Savings (20%)
These calculations can serve as a benchmark; at the end of the month, see if you overspent in any of these three categories, then adjust your spending habits accordingly.
5. Start with the envelope system.
Consider making your budget tool as close to the “envelope system” as you can.
The envelope system was how families managed money in the years before even checking accounts were common.
People got paid, cashed their paychecks, and divided up the cash into various envelopes: rent, telephone, electricity, food, clothing, savings, vacation, etc.
The envelope told them how much they could spend and how much they had left at any given time. When an envelope was empty, the spending had to stop.
6. Set up three accounts: mine, yours, and ours.
First agree on what you will consider “our” expenses. People get tripped up by not making this specific enough, so make a complete list.
Will a birthday gift for your mother come from the joint account or your own? What about clothes, a new surfboard, holiday party costs, entertainment, medical costs?
You might have to fine-tune this list with a little time and experience. That becomes a financial business meeting topic.
Next, agree on the amount of discretionary money you will each have – which works best if that is an equal amount.
Make a list of what kinds of things will be considered “separate” expenses – haircuts? gas? gifts?
This discretionary account then becomes your own business – you can each spend that money on anything you want with no questions asked and no defense necessary.
Having an equal discretionary spending account eliminates issues that can arise when there is a large gap between two incomes or if one partner has different spending habits than another.
It also makes surprising your partner with a gift a lot easier!
All income other than the discretionary amounts is put into the joint accounts – and you see how the budget will work.
7. Stop checking your bank balance on a daily basis.
Checking your bank balance can be a trap: if you have more money than you thought, you will tend to spend it outside of your planned budget.
If you have less than you thought, you will create anxiety that will break down your willingness to face your financial reality.
If you have made a money plan and are following it, you should always have enough money to cover your obligations.
8. Divide up the financial jobs.
Talk first about what you do or don’t like to do, are good at, who is a “spender” or a “saver” and so forth.
Then try some plan: who pays the bills, who does the purchasing of what kinds of things, who keeps track of the income and out-go, who makes investment decisions.
Once a month at one of your financial meetings share the information from your job.
Switch jobs, do jobs as a team – try various options to see what works smoothly.
9. Keep a list as a couple of things that “tricked” each of you into a bad financial decision.
Had a hard time saying “no” to someone asking to borrow from you? Didn’t resist that sale item when you did a little online surfing? Bought too many Super Bowl squares in the office pool?
Stay sympathetic, keep your sense of humor, and be straight up with one another.
You are a team. Try to help one another stay smart about unhealthy financial “relapses.”
10. Cheer for yourselves!
“High Five” one another when you hit the mark – followed the budget, saved enough for the trip you wanted, paid off the car.
Give your budget team a name? Set up a reward for partnership successes?
Make this as much fun as you can – and go ahead and feel a little smug when you outsmart the pitfalls, increase your financial smarts, and save your relationship from the big fights lots of other couples are having over money, money, money.
Mary Quinn has a Ph.D. in Therapeutic Psychology and is Marriage and Family Therapist with a private practice in San Diego. She also dishes out real-life relationship advice on the Sprizr blog, your guide to better dating, relationships, and the science of love.
Editor’s note: Mary Quinn is the mother of MintLife managing editor, Morgan Quinn. All typos and grammatical errors on this blog can probably be traced back to a suppressed childhood memory.