How to manage your money as a couple in nine steps
Working well as a couple when it comes to money is really important, however you operate. There isn’t a one size fits all approach and “for richer or for poorer…” doesn’t always seem to remain a promise in some relationships. Here are nine steps that you can take to ensure that you can get back to bickering about who needs to take the bin out instead of falling out about funds.
1. Talk about it
The first thing to do is to get over the hurdle of talking about the dreaded M word. It’s really important to find out how your other half feels about money. Are they stressed out by it, do they feel comfortable with their current finances, are they frivolous or frugal? Find out if each other has any debt, what your respective incomes are and if either of you has more significant outgoings than the other.
Understanding or at least discussing each other’s approaches to money and financial situations could lead to less disagreements as you should realise that your spouse sees things in a different light than you and vice versa.
2. Get specific
Understand your shared products if one person has usually looked after them, this includes any joint accounts or your mortgage and investigate which other products you both have individually such as credit cards and other savings accounts. Record details somewhere safe that you both have access to in order to stay informed. For example, if something happens to one of you and the mortgage comes out of one person’s account, the other person will be able to contact the lender with the correct information. Morbid, but helpful!
3. Have joint and separate goals and write them down
You both may want to upgrade your kitchen but if someone wants a new surfboard and the other a high-tech sound system, your savings goals won’t agree. Only have shared savings accounts for items or experiences that you both want. Having a common vision will help you both be motivated to save to reach that specific goal and be honest with how much you can both save.
4. Be open and fair
If you do have a joint account then you must both understand that your credit ratings will be affected by the other person. Also remember that if you share the account then you are both responsible for the debt and overdraft associated with it. If one of you is an overdraft dipper and the other hasn’t dropped into the red for years, it may not been the best idea to share an account.
Know how much you’re individually spending as well as what you spend together as a couple. Ensure that you have a household budget nailed down and that you’re happy with how much each of you are contributing as well as how much you’re spending on bills, utilities and food. This may be a 50/50 split or it could be relative to earnings - again, something for you both to discuss and agree on.
6. Emergency fund
Once you have your budget and you know your expenses, set about getting an emergency fund together to cover things such as broken boilers or new car batteries. This should be 3-6 months of your total outgoings that you worked out in your budget, just in case either party is ever out of work, too.
7. Chat about things regularly
Just because things are in order after the first time you sort them out doesn’t mean that they’ll be shipshape forever! Every few weeks or months have a check in to see if you could add a little bit more into the savings pot or if you’re finding things a bit tight, save a little less or try and adjust some bills by changing provider. Good occasions to have a mini money overhaul is if someone gets a pay rise, a direct debit changes or you get to the end of a repayment scheme.
8. Share responsibilities
Decide how bills will be split, whose bank account they’ll come out of, if it’s not joint and make sure you’re both happy with the set up. There may be some things that you’re happy to individually look after and others where you’re comfortable sharing responsibility but you both need to be clear what these are. Discuss how you will manage money day to day, will you have a shared debit card for household spending or will someone spend on behalf of both of you? As above, if responsibilities are shared, make sure that the other person has access to the information about the bills, provider and amount that it costs.
9. Set argument buffers
If you know something might cause a bicker, pre-decide a reaction or a rule. If one person buys something for the house from their ‘personal’ money, will this bother them if the other doesn’t buy something of equal amounts? It sounds very trivial but it can happen easily. Try downloading a budgeting app such as Splitwise which keeps a tally every time someone buys something and let you know who owes who what. Simple!
There we have nine steps to get you on the road to being informed about your finances as a couple. When both parties are happy with the set up, full of knowledge and you have shared money goals you should hopefully find talking finances a little bit easier.