Planning for your own financial future is difficult enough, but when you add in the needs of your spouse or significant other things can rapidly become more complicated. Understanding how to discuss money issues, goals, emotional and tangible needs, and what your life together will look like is an emotionally charged conversation. However, being able to address these important topics openly and honestly with your partner can put you on a path to financial stability and a more calm, happy life together. Here are the 4 things to consider when having a serious discussion about your financial outlook as a couple.
1. Set goals and learn to compromise
You may want a sports car and a big TV, your spouse may be more inclined to go on a beach vacation and buy a new patio set, but if you can’t have both then a decision will have to be made. Being bale to compromise in a situation like this is the key to allowing you to make decisions together rather than arguing or feeling resentment. You’ll have to find compromise on every aspect of your financial planning so get used to it on smaller issues like short term goals as I described above, and work your way up to bigger goals like retirement planning. Consider your partner’s feelings on each topic and how what you would like to do may not line up with what your partner is comfortable with. If the two of you can see the situation through each other’s eyes then you’ll be able to come to an answer that suits both of you.
2. Make a financial road map
After settling on your short, middle, and long-term goals together, the next step is to figure out how you’re going to reach each of these goals. You may hate me for saying this, but the best way to reach your goals is to set a realistic budget and live well within it. I do not recommend finding a generic budget online and filling in the boxes because your life is different from whoever designed that budget and you should build flexibility in to do the things you want to do. Start by making a list of your monthly expenses that are static like your rent or mortgage, car payment, weekly food budget, cell phone, utilities and other bills that are the same month to month and that you need to live comfortably. Next, list your take home income for both you and your partner and subtract the “must pay bills” from your income and the remainder is your discretionary budget. This remaining amount of money should be allocated to the short, middle, and long-term goals you and your partner settled on, and don’t forget to build in a small slush fund for emergencies. Setting this budget can take some time and you may need to tweak things to find the right balance for your life but this step is important for the two of you to agree on.
3. Be accountable to each other
This area is fraught with danger for any couple because it can turn into a fight quickly. It’s already tough to stick to a budget, but a few slips here and there can lead to a budget crumbling. After much experimenting, the best way I’ve found to keep each other accountable is to agree on a process and stick to it. For example, my spouse and I have agreed that once a week and on each payday we ask each other if we have stuck to our budget and followed through with putting our savings towards each goal and paid the bills we are each responsible for. The core to this is to do this regularly and without judgment. You two are working together to make your budget work, so shaming the other person or making them feel guilty or getting angry won’t help you get to your goals. It’s about being accountable and having each partner own up to his or her mistakes and together you work on sticking to your plan.
4. Revisit your budget at least twice a year
Come back to your budget at least twice a year to make sure that your goals are still the same and that you don’t want to shift your priorities. As we all know, life happens and that may result in some goals no longer being important while other goals are more important and you may have new goals to work towards. At the same time as you assess your goals give yourselves a check up to see if the amounts your saving work for your lifestyle or if you should increase or decrease your savings. Talk openly with your partner about how you think you are doing and ask for their opinion on how you are doing with the budget, then repeat the exercise for the other person. The fundamental element of every successful household budget is communication and openness between the people involved. I hope these tips give you the building blocks to use to create a successful household budget and allow you to have solid dialogue about your financial life as a couple.