It may be anathema for a honeymoon or something deemed taboo by some couples in various stages of a relationship, be it the starry-eyed lovers or the post-nuptial honeymooners, but money should be one of the foremost pragmatic concerns as you build your lives together. It may not be easy, but we have 9 tips you can use as a cheat sheet to get it sorted!
1. Be honest
One of the most important things is to stay honest! It contributes a long way to the various other facets of your relationship. In particular, avoid financial infidelity by hiding any assets, debt or income. Also, working together must be the key to working the financial kinks out in the relationship. Try not to be overly possessive of individual assets by demarcating each and every asset or possession in an excessively individual manner. It helps to schedule a discussion time for such matters, so as to pool in all the nitty-gritties like recent credit card reports, pay slips, insurance policies and statements for all financial accounts. Also, there should be no mutual blaming. Just as you should be honest about your situation, be open to what your partner has to relate or say about financial plans and matters.
2. Record everything in a Spreadsheet
Use whichever spreadsheet software that is convenient for you, be it Google Sheets, Microsoft Excel or even OpenOffice Calc! The spreadsheet should include the various sources of income along with outgoing expenses/liabilities which might include (but not limited to) school loans, credit card debt, mortgages, bills, taxes and so on.
Keep a folder that contains these important documents as well at a place where it is secure, but easily accessible. It is easier to keep track of funds in this manner; and it is very straightforward! It will save you and your partner lots of time in trying to re-tabulate everything in a short time when the occasion calls for it, just as filing for tax returns.
3. Have 2 Individual accounts + 1 Joint account
One of the best ways out there is to split everything two ways: have an individual bank account along with a joint account. According to an analysis of Census data by the Pew Research Center, many people already have had five years or more of total financial independence before marriage. Although marriage is usually about being together as a team in tackling various life issues, it shouldn’t include forsaking of one’s separate identity, and it certainly isn’t the forsaking of premarital money habits and prudent attitudes. Surprisingly, although it might seem counterintuitive for the general approach to nurturing “togetherness” in a couple, it actually helps to keep peace financially and emotionally.
One good application would be having a joint account to pay for any shared bills, such as utilities and household bills, while maintaining an individual account where you have money at your full discretionary control. This does not mean that you don’t need to stay truthful and transparent about your spending, however.
4. Talk about your financial goals, memories and habits.
There is no set template to get about doing this as every relationship is different, but there are several non-confrontational ways so transparency and honesty in the relationship are not compromised.
Create a lighthearted setting! Choose a time and a comfortable setting where you and your partner are not busy, and do a pop quiz quizzing each other on each other, as well as their financial habits. Both sides have to answer and compare their answers! You could do something like this, or adapt/improve it to suit you (be creative!):
☆ The “Money In Our Hands” Quiz ☆
You get a month’s salary unexpectedly due to a windfall or tax refund. What would you spend it on?
What is money to you/your partner?
What are the THREE best purchases you’ve made as a couple?
Who has more cash in his or her wallet right now?
My biggest financial concern is:
The cutest thing about my partner at this very moment is
5. Set plans and goals together
Take a bit of time to sit down and lay out financial plans and goals for the family. Allocate income to housing loan(s), kid(s) and their college education, set aside emergency funds, entertainment funds, household necessities funds. Both of you can plan for reasonable purchases that are not exactly cheap but benefit both of you, like a car, TV or even house renovation!
6. Set individual saving plans
Saving does not mean live uncomfortably. As mentioned earlier, simply set aside some savings for the household, but don’t forget to set aside some for yourself. A good percentage for most people is about 20% of their income as savings and 10% as retirement funds. Prioritise what you spend on and what you really need – every careless spending is borrowed happiness from your future, and your future is tied to your partner’s too.
7. Talk to a financial advisor
Managing finances is what they do best, it is their job after all! Talk to them for a perspective that can be different from non-professionals, and even pick up some tips and tricks from them to save. It can even be as simple as finding a good bank with good interest rates or using credit cards with good rebates.
Good and professional financial advisors may even give you tips based on your financial position how to file taxes and how to evaluate financial products to suit your needs and get the most out of them.
8 Grant your partner legal power to make decisions as a healthcare proxy
Nobody likes to think for the worst, but better safe than sorry as many believe. Arrange with your local attorney to grant each other the legal power to make decisions about property, finances and health if one of you (touch wood!) is rendered unable to do so. Healthcare and legal services (in case of disputes) can be expensive depending on where you live, granting the power of decision to someone you trust and understand your household finances best is probably the best idea.
9. Track household finances together
Make it a combined effort! If pen-and-paper and manual calculation is not your thing, you can make use of technology to aid you in tracking, budgeting and allocation of funds. There are great ways to collaborate and great tools available as the world becomes more finance-savvy.
Use spreadsheet webapps like Google Sheets or Microsoft Excel Online – Not only you can access the spreadsheets from anywhere to update, you can share it with your partner to work on it together! If you are unfamiliar, spreadsheets are easier to use than you think. If you can manually calculate on paper, you already know how to write the formulas! If you absolutely hate formulas, there are templates available online provided by other saving enthusiasts.
Use smartphone apps – We spend most of our time on our phones, why not make it productive? Almost every app is made for accounting purposes, but don’t let that scare you off. “Accounts” in those apps can mean “categories”. You can set up a “home renovation” account, “car” account or “TV” account to your liking. Every time you get your income, transfer (within the app) reasonable amounts of money to the different goal accounts. The balance remaining in the app will be your “real” spending money, not the amount in your bank account.
With an aim to simplify finance management, we made Expense IQ, which includes all of the above functions – the free version is more than sufficient for managing household finances as we believe in promoting good finance practices. Questions? Contact us and we can guide you through how to use Expense IQ in your home!
This article is brought to you by the team behind Expense IQ, with a goal to improve everybody’s financial awareness and create tools to support that cause.
Expense IQ: Free Download on Google Play Store
This article is contributed to by our guest writer Kenneth. Thank you Kenneth! If you would like to contribute an article to our blog, contact us through any of our communication channels!