Manage your money as a couple Manage your money as a couple

Learn how to manage your money as a couple and live happily ever after

Many relationships have been known to fall through because the couple has differing attitudes toward money. Even though you think it’s difficult, here are some tips to avoid fighting over money issues. Read on to find out how to budget, choose your credit strategy, and manage your money with your partner.

How to budget as a Couple

To budget as a couple can be a difficult process. It's not an easy thing to move from caring only for your own financial needs to balancing the needs and wants of your partner.

Reaching an agreement may take some work, but not taking the time to talk about money can lead to stressful situations regarding finances down the road. Budgeting as a couple is the key to long-term success. Here are some ways to help you get off to a good start.

Basics first

Talking about your financial habits, goals, and desires is the best way to start the process of planning a budget together. Understanding and respecting that different styles aren't "good' or "bad” is the first step in the right direction. This stage is really about getting to know the other person.

Establish your Household Needs

Once you know each other's financial styles, it's time to figure out the household needs. These can include expenses such as car payments, debt payments, rent or mortgage payments, utility bills, and groceries. 

When you first start budgeting together, you might need to adjust expectations so that you are both on the same page. These obligations may be discussed and chosen, but they need to be met before you spend money on your luxury or extra items. As a couple, your needs should be a priority over your wants and you must be clear about what should come first.  Also, if one (or both) of you has a debt, you need to figure out how to handle it. 

Choosing Long-Term Goals

It's important to set goals to work on as a couple as a part of your financial plan. This plan can help you define when you can buy a house or when to start a family. It can also help you plan for retirement or a dream trip. Working towards determined goals each month can help to strike a budget as a couple and not overspend.

Taking into account Individual Needs

Once you have established your household needs, start talking about your needs, and wants as an individual. These can include things like haircuts, clothing, or singing lessons.

At this point, it is important to understand your needs and wants are surely different and respect this. You may want to set up an allowance to spend on your wants without having to explain to the other person. You should each have money to spend on things that you like and are important to you.

Should You Join Your Finances?

An important question to address as a couple when discussing budgeting is whether to combine finances. This is a personal choice and it can be approached in three ways. 

Joint Finances

Almost everything you both earn goes into a big pot to share expenses. The couple might have small accounts for their personal spending, but, almost all is shared.

Separate Finances

Here, each person has their individual account. Expenses are divided and assigned to each partner. Bills might be divvied up based on a 50/50 approach, or they might be divided according to each person's income. 

Hybrid

Some couples find a hybrid approach makes more sense. There may be a joint account for household expenses and other shared goals to which each partner contributes, but the rest of their accounts are separate. Again, the amount each one provides may change according to income.

The important thing is that both of you feel the approach is equitable and that you're both adequately protected in the event of a breakup.

Best credit card strategies for married couples

It takes some time for couples to learn how to manage their finances jointly. Here are some great tips to handle credit cards.

The truth is that when you get married, a lot of things change. But credit card issuers don’t care what your marital status is. If you apply for a credit card, they will look at your individual credit history.

Managing your finances separately?

A lot of couples decide to keep their finances separate. If this is your situation, a smart move is for each of you to have your own credit card and pay the balance with the funds you each have in your account. This way, you will each enjoy the benefits of having a credit card while building a credit record.

Sometimes, one spouse will need to make a purchase on behalf of the other, so it is a good idea to make the other spouse an authorized user of at least one of the credit cards you hold. Authorized users can make purchases, but the primary holder is responsible for the account.

Managing your finances together?

Some couples consider that managing their finances as a whole helps them achieve their goals more efficiently. For example, if you are paying a high-interest credit card debt, you can transfer the balance to another credit card with less interest, regardless of which spouse is the primary cardholder. 

If a couple does not have an outstanding credit card debt, they can maximize the rewards they earn from their cards. Couples that handle their finances jointly can use different strategies to earn more points. For example, both spouses can apply for the same reward card when it offers excellent sign-up bonuses. 

To keep track of your credit card spending, the best strategy is to have just one person managing the accounts. The spouse that takes over this duty will be in charge of paying bills, track rewards, etc.

Smart ways to manage your money as a couple

Managing your money as a couple is not as simple as it seems. For starters, a lot of people hate having financial talks and this is probably one of the most important things when it comes to managing your household’s finances. Money can be a big issue if the topic is not approached in the right way, so here are some tips that will help you:

Bank Accounts

There is really no right answer when it comes to sharing —or not— a bank account. Separate bank accounts are usually the starting point for any couple, as long as both parties get their paychecks there. Keeping them this way means each one is responsible for their own debt. If this is your choice, then you can assign bills individually. For example, one may be in charge of cable, groceries, and credit cards and the other one might be in charge of insurance, the electric bill, and loan payment. Each month, split rent payment. This way, allowing your partner into your financial situation becomes a lesson of trust.

However, you can also decide to go for a joint account. This is an excellent move if you want to strengthen your relationship because it shows commitment. But this also means that the other person will get to know all of your deepest financial secrets and you will both have to work together to make the most out of your money. It will require a lot of talking and compromise. 

Talk to each other

A lot of couples fear this conversation. The biggest mistake when it comes to managing money as a couple is not expressing thoughts, fears, dreams, and goals. Some experts recommend a three-way approach to make things a lot easier: a dream date, a money date, and a budget date.

Dream dates don’t have to be formal. Just go out for a cup of coffee and talk about your dreams, goals, or how you see yourself in the future. Share this with your partner at the same time your partner shares their goals and visions with you.

Money dates can be a little bit more difficult, but they are necessary. This date is to solve any financial issue you might have. It is when plans are made, compromises are made. First, set ground rules: no blaming, no name-calling whatsoever, stay open, don’t get defensive. This is the date to put it all out there and start solving problems.

Budget dates are the ones you will use to make a real plan. You will get here last because, in order to create a joint budget, you first need to know your goals, your partner’s goals, and most importantly, you need to have solved any issue in between.

Once all that is settled, you are definitely ready to create a budget between the two of you to achieve your goal in no time!

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