Money is known to be a leading cause of stress in romantic relationships. It can be challenging to merge two financial lives together, especially when each partner has different spending habits, financial goals, and expectations. However, managing money with your partner doesn’t have to be a source of tension in your relationship. It can be an incredibly rewarding and fulfilling experience if handled correctly. In this article, we will explore the ultimate guide to successfully managing money as a couple. We’ve broken it down into six simple steps that will help you communicate better, set common goals, create a monthly budget, assign roles, track your progress, and make adjustments along the way. By following these steps, you can not only manage your finances effectively but also strengthen your relationship. Get ready to achieve financial harmony as a couple!
How the Modern Family Manages Money
Today, I am featuring tips provided by expert Brian Page to offer you advice on how to manage money as a couple. He is founder of the Modern Husbands community which is devoted to sharing ideas to manage money and the home as a couple. Brian Page spent 15 years as a personal finance and economics educator. He has been recognized as a CNN Money Hero and a Council for Economic Education Forbes Award winner.
Most of our fathers had clearly defined roles – they were the stereotypical ‘Men of the House.’ They were the breadwinners, working 9 to 5 to bring home the bacon. They mowed the lawn and changed the oil. Fast forward to today and the world of work looks very different. Women earn around the same or more than their husbands in 45% of households.
As Scarlet Paolicchi stated in her post Career Woman: Finding Balance With Family, “Choices about careers and families are much different for women now than they were 50 years ago. Many women today don’t want to have to choose between career vs family. They want both, and society tells us we can have both. But both often mean burnout and feeling like you’re not giving enough of yourself to one or the other.”
In the realities of the modern world, spouses must work together to support each other’s careers. Conversations about each other’s career futures should replace the default expectation of women stepping back from work so their husbands do not have to. What does personal finance have to do with dual-income households? Everything. Money does not solve every problem, but it does make issues easier to manage.
Conversations about the careers of both spouses look much different in 2023. In the modern world, either spouse can walk through the front door with a life-changing career opportunity that could require moving or the other spouse stepping back in their career. Understanding the best direction for the family requires a thorough understanding of the household budget and the financial upshot of making a move.
How To Manage Money As A Couple
Here are some practical and evidence-based ideas for couples to take their first steps together to manage their finances.
Communicate openly and honestly
One of the most critical components of successfully managing money as a couple is open and honest communication. Without it, it can be challenging to understand each other’s financial values, priorities, and goals. When you are transparent about your spending habits, income, and debts, you create a foundation of trust that can help you make better financial decisions together.
Scarlet Paolicchi shared some good ideas in her post, How To Talk To Your Spouse About Money Without Fighting. The most important suggestion from her post is the first suggestion: Schedule a financially focused date night.
A money date is a scheduled conversation between you and your spouse in a comfortable environment that allows you to discuss your shared goals, values, and relationship with money. Money dates keep couples on the same financial page — allowing both partners to control money in the relationship.
Talking about money in advance allows for couples to be prepared to mitigate the inevitable financial turbulence that accompanies adulting and plan for future financial goals. It’s far more effective and enjoyable to talk about money proactively than to wait to only talk about money as a reaction to a problem such as a missed payment, credit card debt, or financial infidelity.
Discussing money isn’t easy for some. Our relationships with money are formed early in our lives, and the experiences that shape our money stories are not always healthy. Past financial trauma, money problems, or zero experience to a personal finance education can make it hard for couples to speak openly and honestly about money. Talk about money, don’t react to it.
For ideas to approach the conversation with your partner, read What is a Money Date? If you prefer a podcast episode to reading, listen to How to Talk About and Manage Money with Your Spouse, a Modern Husbands Podcast episode with Dr. Megan McCoy, a professor of Kansas State University who teaches courses for the Financial Therapy Certificate Program.
Set common financial goals
As you begin your financial journey as a couple, it’s crucial to set goals and expectations. Whether you want to save for a down payment on a house, pay off credit card debt, or plan for retirement, working towards shared objectives can help you stay motivated and focused. When you have common financial goals, it’s easier to make financial decisions that align with your long-term plans.
Research findings emphasize the significance of shared values, illustrating that financial disagreements can predict marital conflict and divorce, potentially more so than other types of disagreements. Thus, aligning values and preferences in a budget, such as prioritizing experiences over material possessions or planning for children’s education, can significantly reduce potential conflicts.
Budgets must reflect shared values and goals. However, setting common goals can be challenging, especially if each partner has different ideas about what they want to achieve. It’s essential to approach these discussions with a willingness to compromise and a commitment to finding common ground. Remember, your financial goals should benefit both of you, so it’s crucial to communicate openly and honestly throughout the process.
To make your shared financial goals a reality, you need to have a clear understanding of your income and expenses. The best way to do this is by creating a joint budget.
Create a joint budget
To achieve financial success as a couple, you must set shared financial goals and then create a joint budget. This will allow you to track your income and expenses and ensure that you are both on the same page when it comes to spending. Creating a budget can also help you identify areas where you can cut back and save for your future goals.
When creating a joint budget, start by listing all sources of income, including your salaries, bonuses, and any other income streams. Then, list all your fixed expenses, such as your rent or mortgage payment, car payment, and insurance. Next, list your variable expenses, including groceries, entertainment, and other discretionary items.
Once you have a clear understanding of your income and expenses, you can work together to allocate your resources in a way that supports your shared financial goals. Designate roles and financial responsibilities to ensure that both partners are actively involved in managing your household finances and making progress towards your goals.
A family budget should be a math based guide to living the shared values and goals between couples. Think of them not only as a financial roadmap but also as a mechanism for fostering harmony, achieving shared objectives, and strengthening relationships.
Creating a joint budget is an essential step in successfully managing money as a couple. It sets the foundation for good communication and helps ensure that you’re both working towards the same financial goals. Next, we’ll discuss how to designate roles and responsibilities to effectively manage your finances together.
Designate roles and responsibilities
To effectively manage your joint finances, it’s important to designate roles and responsibilities. This ensures that both partners are actively involved in the financial decision-making process. You can divide tasks based on each partner’s strengths, interests, and availability. For example, if one partner is more detail-oriented and enjoys creating spreadsheets, they can take charge of tracking expenses and creating a budget. The other partner can then be responsible for bill paying and monitoring credit card statements.
By assigning specific roles and responsibilities, you can avoid duplication of efforts and ensure that both partners are held accountable for their respective tasks. This also helps to avoid misunderstandings and arguments over missed payments or overspending. Remember, the goal is to work together towards shared financial goals.
Once you have designated roles and responsibilities, it’s important to track your progress towards your shared financial goals. In the next section, we’ll discuss how to measure your money management success and adjust your plan accordingly.
Track your progress
Once you have assigned financial roles and responsibilities to each partner, you need to measure progress towards your shared financial goals. Tracking progress is essential to ensure that you and your partner are on the same page and working towards your goals together. To begin, set specific financial targets with your partner and determine how you plan to achieve them. It could be reducing debt, saving for a down payment on a new home, or investing in your retirement.
To track progress, establish a system that works for both you and your partner. You can create a shared budgeting worksheet or use an app to track shared expenses and achievements. It’s important to check in regularly to see how you are progressing towards your goals. Celebrate small milestones and make adjustments as needed.
Making adjustments to your plan is essential for success. It’s normal for couples to experience unexpected expenses or income changes, so it’s important to be flexible and adaptable. Revisit your goals regularly and adjust your plan accordingly. Maybe you need to tighten your budget in certain areas or adjust your savings goals. Discuss your options with your partner and come to an agreement on the best course of action.
Make adjustments as needed
After setting your budget and financial goals as a couple, it’s essential to remain flexible and make adjustments as needed. Life comes with unexpected expenses, and income changes, so it’s essential to be adaptable. Revisit your financial plan regularly, making sure it still aligns with your long-term goals.
Maybe you initially allocated funds in certain areas, only to realize that they aren’t essential or are not being used. It’s best to re-evaluate and make adjustments by reallocating those funds to other areas, such as your savings or investments. Have an open discussion about any financial issues.
Additionally, it’s important to discuss and agree on changes with your partner. You can’t make unilateral decisions that affect both of you without consulting your partner. You must communicate when changes arise and work together to create a new plan.
Remember, managing money as a couple is a journey, not a destination. By tracking your progress towards shared goals and being willing to make adjustments along the way, you can strengthen your financial partnership and set yourselves up for long-term success.
Successfully managing money as a couple is not easy, but it is achievable. Communicating openly and honestly, setting common goals, creating a joint budget, designating roles and responsibilities, tracking progress, and making adjustments are all essential steps. By working together as a team and supporting each other, you can strengthen your relationship and achieve a brighter financial future. As the saying goes, “two heads are better than one,” and this is certainly true when it comes to family finances. So, take the necessary steps to have money conversations, manage your money effectively, and remember that success requires teamwork. As the famous quote goes, “Alone we can do so little; together, we can do so much.”