It’s February, love is in the air, and what a perfect time to discuss the relationship between money and marriage. One of the biggest causes of fights in a marriage is money. No matter what stage you’re at in a relationship, it’s a good idea to discuss major money topics so you’ll know where you stand.
Show Me the Money: Combine, Keep Separate, or Both
One way to avoid conflict is to put your money into three separate categories: yours, your spouse’s, and a joint account. In this arrangement, each person has control over a portion of their own money. The household spending will then come out of the joint account, where both parties will make contributions on a regular basis.
As a couple, you’ll need to discuss who will pay for what as well as what your regular contribution will be to the joint account. This is no small discussion. The more thorough you are, the less conflict you’ll have over money.
One partner typically handles the joint finances, usually the person with the most accounting knowledge. However, you both should have access to this account in case of emergency.
Savings and Future Purchase Goals
Do you have goals for upcoming large purchases? These might include:
- A home purchase or improvement
- Children’s education
- Health care needs
- Saving for retirement
- Car purchase
- Second home purchase
- Another item such as a boat, furniture, technology gadgets, a plane, or something else
- A nest egg or cushion
If so, calculate how much you need and make a plan to set aside the money you need in the time frame you agree on.
Do you like to spend more than your spouse? Or is it the other way around? When money is flowing, there is usually no problem. When money is tight, that is when the problems occur.
When there are conflicts in the area of spending, the best course is to focus on priorities. If you can agree on your priorities and goals, it can often shift spending habits.
Set a budget! Stick as close as possible to expected spending limits. Start by recording current spending in these areas, and then agree on the amounts you want to spend in the future.
- Rent or mortgage payment
- Utilities, including electric, gas, water, garbage, phone, internet, cable
- Food and supplies, including grocery, kitchen items, liquor, and eating out
- Entertainment, including travel, vacations, local events, holiday decorations, Netflix subscriptions, tech gadgets, books, etc.
- House maintenance including repairs, cleaning, lawn care, appliances, and decorating
- Automobile, including gas, insurance, licenses, and maintenance
- Clothing and accessories, including dry cleaning
- Health care, including pharmacy, doctor’s visit, and HSA contributions
- Personal care, such as haircuts, nail care, etc.
- Tuition and/or education expenses
- Contribution to retirement and savings accounts
- Charitable contributions
- Taxes, including federal, state, local, school, and property
- Paying down credit card or student loan debt
What does retirement look like to both of you? Having this conversation will be enlightening. Know that dreams and goals can change over time as retirement approaches.
You’ll want to have an idea about what you’d like to spend during your final years so that you can make plans to start accumulating that wealth now. The sooner you start, the more years you have to build up your retirement assets.
Monitoring Your Progress
Keep an eye on your account balances to make sure everything is as it should be. Review bank and brokerage account statements and/or your budget once a month or at least once a quarter so there are no surprises or trends that sneak up on you.
When you reach your goals, reward yourself. Managing money is hard work and you deserve to pat yourself on the back when a goal is achieved. Do you need help with budgeting? If there is anything we can do to help you make your financial dreams come true, please reach out to your favorite OC Bookkeepers at Team One Accounting any time.