In case you haven’t heard it a million times before, we’ll tell you again: Money is one of the biggest sources of relationship conflict and a leading cause of divorce. Many couples fight over their finances, because both partners don’t share the same attitude about money (one person is a spender and one’s a saver; one of you wants to use your tax refund for a vacation, while the other wants to put it toward a new TV; your partner believes you should combine your funds, while you think what you earn should be yours to spend as you please…you get the point). So if you don’t want money matters to take a toll on your relationship, you’re going to need to learn to manage your moola as a team. Read on to find out how.
Devise a Budget Around Your Goals
Now that you’re combining two incomes (or at least sharing the expenses) and the words “savings,” “new house” and “car upgrade” are looming, it’s time to create a money plan. Yes, we’re talking about the dreaded B-word again. Here’s the catch: To create a budget you both can actually stick to, build it around tangible goals you come up with together. These should include short-term, intermediate and long-term goals you both want to achieve, so you can work together toward a common financial goal.
Short-term goals might include building a savings safety net of X amount by the middle of the year or deciding to put X amount in savings each month. Intermediate goals might include the following: “We want to be out of credit card debt in two years,” “We want to save enough for a down payment by the end of the year” or “We want to have X amount in our retirement fund five years from now.” And long-term goals could include investing X amount of life insurance or launching a small business or buying a second home down the road. These goals should change every few months as your financial situation (grad school, perhaps?) or plans (baby?) evolve. Add new goals as you meet old ones, tweak any that aren’t working and revisit them together on a regular basis to monitor your progress.
Once you have your goals mapped out, here’s what to do: Start with your monthly income and subtract the projected cost of that goal (like putting $200 toward savings each month). Then create a monthly budget around this new figure. Start with the most important expenses (mortgage, car and food), and work your way down the list until you’re out of money.
Make Money Rules
To avoid blow-ups over the shoes you bought that were way too expensive even if they had been on sale (like you told your husband) or the cable bill that he completely forgot to pay again, it’s important to spell out general expectations about how you will handle your expenses and spend your cash. For example, agree to a spending limit that nobody can exceed without discussing it first (read: neither of you can spend more than $200 on any one item without a quick convo). Work together to come up with ones that address the issues that usually cause conflict.
Accept Your Differences
Mismatched spending (or saving) styles are pretty common, but the key is to accept the fact that everyone deals with money differently. Know thyself: Are you a saver or a spender? Then discuss and budget for your different attitudes. This lets savers save without hoarding, and lets spenders spend without splurging. Include a certain amount in your budget for discretionary spending or saving. Then the spender can spend that money however he or she likes, while the saver can invest it.
Keep in mind that the way you’re raised has a big impact on your money style, and it’s rarely just about dollar bills. Some spenders grew up watching their parents struggle and refuse to deny themselves as adults. Some compulsive savers grew up in a similar situation, and refuse to spend a dime they can’t get back. Accepting and working with each other’s differences and (here comes the C-word) compromising on a plan that takes into account both your money habits are the best ways to keep your relationship and finances healthy.
Nestpert: Michelle Singletary, author of Your Money and Your Man.