YOURS, MINE, THEIRS AND OURS: Managing your money as a couple

Alex Kim

When Jessica and Zach first got engaged, they opened a joint bank account to save for their wedding. They each agreed to put in a certain amount from their paychecks each week, and they easily settled on a budget that included the wedding dress, how many people to invite, the location and all the other details.

When Jessica wanted to spend a little more on a dress than originally planned, they discussed it and negotiated. They considered the financial planning portion of the wedding a success. They had their dream wedding and stayed within the parameters of the budget.

So why is money dragging their relationship down five years later?

Men and women often do not view money from the same perspective. This can result in power struggles, and it often takes longer to recover from arguments about money. Money, especially when spent on frivolous purchases, is the No. 1 cause of fights between partners. It is fraught with emotions and not always easy to discuss. Finances can bring stress and frustration to individuals and the couple as a whole. Spouses might feel their money habits are judged, which can increase the tension.
It’s helpful to acknowledge that you both come from different backgrounds and might have grown up with varying money stories and lessons. Discuss the narratives around debt and spending. For instance, is one of you a meticulous saver while the other is an impulsive spender? You might never agree on everything concerning money, but it’s important to understand where your partner’s point of view comes from and realize they are not deliberately working against you.
Conflict is an opportunity to address issues and doesn’t mean the marriage is headed for divorce. Marriage involves balance and compromise, and it makes sense that your lifestyle needs to align with your actual income.

Tips on working together
Managing money as a couple is a team effort. Here are strategies for navigating your finances with your spouse.

#1: Communication is key: Open and healthy communication is vital. Have a conversation with your spouse about your individual financial situations, including income, debts, investments, property, vehicles, spending habits and financial goals. But this initial sit-down about money should not be one-and-done. Have regular discussions to facilitate ongoing dialogue and ensure both partners are informed and involved in financial decisions.
Purchases, cash, and credit cards should be discussed honestly and not hidden from the other spouse. Financial experts believe hiding purchases or stashing away money creates a lack of trust. Do your best to set expectations together. On the other hand, no one should feel as though every dollar they spend needs to be “reported” to their spouse.

#2: Set common goals together: Decide on shared short-term and long-term financial goals with your spouse, whether it’s saving for a vacation, buying a home, or planning for retirement. Make sure these objectives are aligned with both of your priorities.

#3: Establish a budget: The experts are divided on whether couples should have joint or separate accounts, but they agree that all the household income should be viewed as a whole in the family budget. Create a budget for the two of you including cash flow and spending. Set aside funds for essential expenses, while allowing for discretionary spending and saving targets. Your budget should include shared savings targets, like a family car, and can include individual goals, like hobbies. Regularly review and adjust the budget to accommodate changes in your financial circumstances.

#4: Divide and conquer: Split up financial tasks based on your and your spouse’s strengths and preferences. For example, one spouse could pay bills and track the budget and the other manage investments. Have regular check-ins to ensure transparency and accountability.

#5: Maintain individual autonomy: Set aside discretionary funds for personal spending or hobbies. This autonomy fosters trust and independence within the relationship, reducing the likelihood of financial conflicts.

#6: Tackle debt together: Develop a strategy for paying off debt efficiently, whether it is addressing the debt with the highest interest rate first while making minimum payments on others or tackling smaller credit card debts first to garner some quick, motivating wins.

#7: Look into the future: Talk about and plan for long-term goals, including retirement savings, insurance coverage and estate planning. Determine savings targets for retirement and explore investment options suitable for both you and your spouse’s risk tolerance and financial goals.

#8: Go to the pros: Consult financial planners and tax advisors for guidance specific to you and your spouse. Their expertise can provide valuable insights and help navigate complex financial decisions.

#9: Don’t let the kids run the show: The cost of children’s activities, toys and games, clothing and other child-related expenses can add up. Make sure to set limits on non-essential purchases. It will help your children appreciate the luxuries they have more and allow you to maintain your financial priorities.

Be intentional when creating a financial plan. Have a calm, honest and open conversation when both of you are relaxed. Work from the facts, not emotions. Numbers are neutral. If you don’t agree on certain expenditures, dig deeper to determine the root cause that might be creating the rift.

If you can’t work out the financial issues together, consult with a financial professional. Remember, marriage is a partnership, and couples need to work together in all areas, including money.