You’ve both come a long way from stashing pennies in a jar on your dresser. But are you ready for grown-up budget know-how? We asked Michelle Singletary, syndicated personal finance columnist for The Washington Post and author of Your Money and Your Man, for her top five money-managing lessons for couples. Yearning to hear the happy sound of Benjamins canoodling in your wallet?
Lesson #1: Pay debt and save at the same time
You should always be saving. Some advisers may argue differently, but think about it this way: if you use your credit card in an emergency, you’re just going deeper into debt. So give yourselves a financial cushion to fall back on for that inevitable flat tire or emergency room visit which seems to happen at the most financially inconvenient times (like after the holidays!). Quit living life without a safety net and put at least three to six months’ worth of expenses aside.
Lesson #2: Give your budget a goal
Yeah, yeah, we all know we’re supposed to budget, but keeping track of expenses on your debit card report doesn’t count. Now that you’re combining two incomes and the words “savings,” “new house,” and “car upgrade” are looming, it’s time to create a money plan. Here’s the catch: Your budget should have a tangible goal in mind.
Often, this goal will change every few months, or you might add a new challenge once you’re comfortable with your first few. Think of these as short-term, intermediate, and long-term goals, and create a budget around them. Start with your monthly salary and subtract the projected cost of that goal (like $200 toward savings each month). This new figure is from what you should create your budget. Factor in monthly expenses, starting with the most important (mortgage, car, and food), and work your way down the list until you’re out of money.
Lesson #3: Merge all your accounts
You might think that your clothing and spa splurges are best left to your separate account -- that you’ll pre-empt certain “You spend too much” arguments this way. But your relationship can only be strengthened by being honest about money and working toward financial goals together. Sounds cheesy? This may be an extreme example, but if your spouse was up to no good, you wouldn’t just tell him to do it down the hall! So if one partner is bouncing checks or struggling with debt, it doesn’t solve the problem just because he has his own account. Your money is his money. It doesn’t mean you can’t splurge, but sharing one account -- and answering to someone -- can help you make responsible purchases.
Lesson #4: Any debt is your debt
In some cases, your spouse’s debt may not be your obligation, but morally it always is, meaning you should have a stake in each others’ financial lives. Think of it this way: If your spouse were seriously ill, would you expect him to handle it on his own? Of course not: You’d go with him to the doctor, help track his progress, and investigate the best treatments so he’d get well.
Lesson #5: Make money rules
Here are three to start with:
- Agree to a spending limit that nobody can exceed without discussing it first -- neither of you can spend more than, say, $200 on any one item without a quick conversation about it. It’s not a matter of “granting permission” so much as holding to your common goals. And of course, avoiding surprises that might start unnecessary arguments.
- Everything requires two yeses or one no. You both have to agree on the purchase or nothing gets done -- getting a new TV, for example, takes two yeses. One no is enough to make both of you reconsider whether you really need a new living room rug when you just bought one six months ago.
- Finally, don’t involve outsiders in your personal finances. Your money issues are between the two of you -- anybody else who gets involved usually hears only one side of the story. If you’re struggling and need financial advice, talk to someone who can actually help you solve the problem -- a financial counselor, not your mama or your best friend or your dog. (Okay, maybe you can vent to the dog.)