When two people decide to walk down the aisle together, they’re probably not basing their decision on how financially compatible they are. At least we hope that’s not the case.
But once the dregs of the wedding cake have been thrown away and the honeymoon snaps are safely in their frames, how you deal with money as a couple becomes an important consideration.
Financial pressures can put a huge strain on any relationship and have led to the end of many a marriage. So here are five money matters that you need to learn to deal with together.
1. Be open about money
If you don’t form good habits early on in a relationship then the bad ones will stick with you. This means you’ve got to start out being open and honest about your financial situation as soon as things get serious.
You’ve already made the decision to spend the rest of your life together, so there should be enough trust to share things like your salary and any dirty debts you’ve picked up along the way.
Otherwise, that hidden income or concealed credit card will cause problems when it’s inevitably discovered.
2. Understand each other’s values and goals
It’s important for each person to understand what the other wants to achieve financially, both in the relationship and for themselves.
Don’t expect to be 100 per cent aligned on everything; there’s no right or wrong answer, and words like security, lifestyle and comfort mean different things to different people.
But once you’re on the same page it makes managing money so much easier, from everyday issues like choosing a restaurant to tough decisions like how much to spend on a house or where to send the kids to school.
3. Line up spending habits
If one person is squirrelling away every spare dollar while the other is consistently blowing their pay cheque on the latest ‘must haves’, sooner or later things will come to conflict.
This can be avoided by making sure your spending habits are compatible. A budget will help here, as will understanding each other’s goals.
We’ve met so many couples who, through being disciplined with their money and working towards the same goals, have ended up with more wealth than those who earn three or four times as much but spend the lot.
4. The joint account
While it’s certainly not essential to have a joint account, they can make the process of managing money simpler, more transparent and fair… Think splitting bills, buying groceries and paying the rent or mortgage.
And if you spend less time arguing about money, then you can spend more time enjoying your relationship.
To make a joint account work, a good option is to set up three accounts: yours, theirs and the joint account, with wages deposited into your individual accounts.
Then look at what you both earn and set up an automatic transfer for a certain percentage (to keep things fair) of each wage into the joint account each month.
If only one partner earns, you’ll need to work backward. Deposit the entire wage into the joint account first, then transfer money into each individual account.
5. Don’t be financially ignorant
For two people to jointly manage their finances, each partner must have a basic understanding of money.
Start by opening your eyes and ears to financial news… Daily newspapers, television, radio and books on money can all provide enormous help. For more complex matters, it can be extremely helpful to see a financial planner together.
By squaring up your financial relationship, you can avoid conflict later and build a brighter future together.