At some point, both you and your partner will have to discuss the sensitive money issue. It doesn’t matter whether you are married or not; as long as you live under one roof with your partner, such discussions are bound to come up.
However, the elephant in the room will likely be how to split finances.
Should it be a 50/50 affair?
Relationships can be complicated, especially when it comes to money. You have student loans; they have burdening debts. The list goes on, and while relationships require equal contributions, money is not on the list of concerns for many partners.
Both of you can avoid frequent confrontations by establishing proper communication channels which you can use to discuss money issues. A study conducted by Kansas State University revealed that arguments about money determine whether a couple will survive a divorce. With such potential damage to your relationship, it is vital to understand how to handle money matters in the relationship.
Draw the Line
One of the most common disputes among married couples is money-related issues. The best way to overcome this obstacle is by having separate accounts where both can control their own finances. Also, have a joint account in which both partners contribute to cover various shared expenses.
According to a study done on couples aged 22 to 92, the happiest couples were the ones with independent accounts in their marriage. This way, they avoid the arguments related to the control of the accounts.
A joint account demands mutual trust and transparency while also showing commitment toward a shared goal.
The Difference in Income
There’s a high probability that both of you will bring home varied salaries, and the difference might be quite huge. Does this mean that both of you should chip in half of your income to cover the mortgage? No. Fair and equal are two different things.
List all the expenses in the household, including taxes, utilities, and insurance. Afterward, look at both your salaries. If your partner makes $70,000 and you make $30,000, then the expenses should be divided based on the income. This means you should take care of 30 percent of the household expenses, and your partner should take care of 70 percent.
To go about this in a smooth way, you and your partner should come up with a direct deposit to channel some of the shared income toward a joint account which will take care of shared expenses.
Keep in mind that bills vary from one month to another, so you need to reserve some amount for such scenarios.
Personal Expenses
The shared expenses, such as gas and electricity, are included in the budget, but what about the student loans or a car loan, or a bad credit loan you acquired long before you met? What about credit card debt? All these are a result of personal decisions.
Communication is important in any relationship. Your partner could be deep in debt, and you can offer a helping hand to clear it. This will enable both of you to concentrate on bigger common goals.
You can also offer to take care of the household expenses so that you can free up your partner to take care of their debts.
Your Savings Plan
It is important for both of you to have a common goal. To achieve that goal, you must have a plan. This can be a short-term or long-term goal. The latter could mean buying your dream home, while the former could be taking a much-needed vacation in the next six months.
It doesn’t matter which goal you’ve set; it’s important that your partner is aware of these goals. If both of you have eyes on the same prize, it will be easier to save toward achieving it.
Both of you should come to an understanding about the amount you are comfortable with. Afterward, open a joint account which will act as your savings account. While making contributions toward joint savings, don’t forget about your retirement goals. For example, your partner might be contributing 5 percent toward their 401(k) while you are putting in 10 percent.
Talk about these things and discuss how both of you intend to meet your retirement and savings goals. Also, take a look at whether the contributions need any adjustments.
Investment Strategies
Both of you might have different views on how to invest. Your partner might be aggressive in investing, but you are the type that likes to invest in low-risk accounts. If the difference is this varied, you might want to seek the services of an investment adviser to find common ground.
By doing this, you avoid quarrels and, most of all, duplication of efforts. As a result, you’ll have synchronized efforts making your investments easier. Overall, both of you should understand the joint investment and how the investment is doing.
Retirement is also an investment, but you may have a dream of retiring at fifty, while your spouse intends on retiring much later than that. This is why it’s vital for both of you to communicate and talk about your goals.
Dividing Various Duties
Money management is more than just splitting household expenses. It’s about making sure all the duties involved in money management are also split equally. In almost all relationships, there exists a partner who handles all the money matters while the other simply stares at the happenings.
Such scenarios can be quite devastating, especially if one of the partners decides to be ignorant of the trends displayed by their significant other, which might also affect the family’s finances.
Again, communication is the key to resolving such issues. Have regular meetings to discuss money issues. This includes providing equal input in terms of thoughts and the money itself.
Final Thought
Just like finances are discussed among partners in a business, it’s important for partners to discuss money issues.
Have a plan in place to help you maintain a healthy and happy relationship instead of spending valuable time exchanging bitter words in heated arguments about finances.
