Financial matters like income, savings and investments can be a contentious topic of discussion in marriages and relationships. While it is common to have differing opinions on money management, it should not put any added pressure on your relationship and be the reason for friction between you and your partner.
The best way to navigate such differences is to devise a financial plan together and have open conversations around money from time to time. Doing so will help you avoid quarrels over money matters and help you make informed financial choices as a couple instead.
Generally, the key challenge here has less to do with how to manage wealth and is more about finding the right way to combine finances, if at all. Is it better to have a 50/50 split approach? Should one partner’s income be used to manage home finances and liabilities whereas the other can tap into savings and investments?
Well, there is no one-size-fits-all approach to managing finances as a couple. However, there are some interesting personal finance strategies specifically for couples that can help develop good money habits and strengthen your financial portfolio further.
It becomes easy to manage finances as a couple when the crux of your relationship is built on trust and honesty. So when it comes to financial planning, start off by having an open conversation about the current status of your finances. This includes everything from how many streams of income you have, how much you are earning, details about loans, matters regarding property and real estate, credit history, debts or any other liabilities.
It is also essential to be aware of your partner's spending habits, which will help identify the expenses you would like to share together and where you need to divide financial duties.
Devising shared financial goals that both of you would like to target together as a couple can help you relieve financial stress considerably. While you can still maintain your individual financial goals, having some common short and long-term money goals like paying off high interest debts, purchasing a new home or a car, exploring good investment options, and saving up for a yearly vacation will make sure that there is no room for financial mishaps.
You could also consider maintaining a joint bank account where both of you can add a set amount each month specifically for covering shared expenses like rent, food and groceries, utility bills, etc. This will help you keep track of your household expenses with ease and keep confusion at bay. If both partners are earning, dividing financial responsibilities equally is key in order to avoid the real consequences of financial distress.
Having a set budget to abide by can be a great tool to control your expenses and keep track of how much you spend. You can start by creating a budget together that covers all your collective expenditures for the month, including both your individual expenses as well as shared costs like bills, utilities etc.
To segregate this further and work with a more functional budget, you can use the 50-30-20 rule by dividing your expenses into 3 categories of essential (50% of your budget), wants (30%) and savings (20%). For savings, it is best to plan your investments together and perhaps even get in touch with a finance expert who can help you foresee suitable investment plans for couples.
This is one of the most important choices you will make as a couple since it will have a huge influence on your current and future finances. There are essentially three financial strategies to adapt here, depending on your income and money goals. First, you can merge all your monthly funds and share the expenses equally by splitting it two ways. Second, you can maintain a separate joint account where both of you contribute to cover shared expenses.
Third, you do not create joint accounts and upkeep separate individual accounts instead and decide on how you would like to split the bills. This can be decided in accordance with each partner's income in case a 50/50 split does not deem fit. A 60/40 split for instance, may make more sense if one partner is earning significantly more than the other.
When it comes to buying life or health insurance, these decisions are best made collectively as a couple. With healthcare costs increasing like never before, it is essential to set up a cashless medical insurance to help you deal with any unforeseen medical emergencies in the future without diminishing your finances.
It would also be wise to set apart a fixed percentage of your income towards an emergency fund that will help you cover expenses at least for a minimum of 3 months. Having an emergency fund to fall back on can save you from a potential financial crisis situation.
Managing expenses and investments with your spouse can be a challenging task to accomplish. It is not always easy to make the right financial choice. For instance, should you further invest your savings or take that long pending vacation instead?
For simplified investments, platforms like Dezerv are incredibly useful since it is led by experts in the industry who can help you maximize your wealth and manage your financial portfolio for you.