One of the most volatile subjects in a marriage or relationship is money. Money, unfortunately, can be the wedge that drives two people apart.
A failure to communicate about budgeting, saving or expenses can lead to some pretty ugly arguments. On the other side of that coin — pun intended — is a joy that can come with being on the same page with your spouse or significant other about your couples finances.
If you’re in a committed, long-term relationship, it’s important to talk about money.
Know Your Combined Expenses
Remember, you’re not just taking care of yourself anymore. You’re not providing for another person altogether, but now that you’re in committed relationship or married, you’re part of a team that supports the living expenses of at least two people.
If you’re a man, there are almost certainly things that your significant other has to buy that you never even thought of when you were on your own. If you’re a woman, there are things men need that women won’t get much use out of.
Basically, there are going to be some changes. And you need to account for your partner’s spending needs as well as your own.
Make a Budget
Once you know your combined expenses, it’s time to make a budget. This is where you account for literally everything you spend money on each month — rent, bills, food, clothing, gas, entertainment and everything else — and you subtract that amount from your monthly paycheck.
The good news about being in a committed relationship is some costs will be shared and therefore will be split in half — bills and rent come to mind. However, now that there are two mouths to feed under one roof, that fridge will have to be well-stocked. And food isn’t free.
One way or another, you have to make sure the amount you’re spending doesn’t exceed the amount of income you bring in.
Find a Plan
An effective strategy to try is the 50-20-30 rule. This plan uses three spending categories to build your budget — living expenses and essentials, savings and other financial goals, and flexible spending. It should break down like this:
- Fifty percent of your monthly budget should go toward the essentials, like rent, bills, food and gas.
- Twenty percent of your income should go toward savings and trying to meet other financial goals, like retirement.
- Thirty percent of your income should be kept aside for whatever random needs may arise. That way, you’re always prepared.
And don’t despair if your plan doesn’t run smoothly the first couple of months. It always takes a little while for you to learn exactly where all of your money is going, especially when you have two people feeding the money in.
Saving for the Future
The 20 percent is extremely important. Assuming you and your significant other make $50,000 a year, putting away one-fifth of that would stack up $10,000 a year in your savings. Doing this for just 20 years gives you $200,000.
Would anyone say no to having $200,000 in savings? Probably not.
This is why it’s important to save money in general, but especially important for couples to save together. And if your budget is very tight, there are still ways you can save money. You just have to get creative.
Ways to Save Money
Try making your own gifts instead of buying them. Eat out less and cook at home more. These are fun ways you can do things together and bond, while also saving money.
Basically, you need to cut down on impulse spending, and the 30-day rule is a proven method to reduce such spending. Whenever you as a couple feel the urge to buy something expensive — shoes, a television, whatever — don’t let yourself buy it.
Instead, go home and write down the name of the item, where you found, how much it costs, and the day you found it on a sticky note. Put the note somewhere you’ll both see it every day, and wait 30 days. After 30 days, if the item still seems appealing to you both, go buy it. However, you’d be surprised how often you’ll end up deciding not to make the purchase.
Once you cut down on some of these behaviors, you can begin to lower the amount you have to account for in your budget. Simple math will tell you that leaves more money for you to put away in savings.
Get a Retirement Plan Together
It’s not quite enough to just funnel money into your savings account. With no real dollar figure in mind, at some point, you’re likely to lose your resolve.
You’ll start to wonder what the difference is if you take out a couple thousand dollars from that savings fund to pay for this car repair. Use each other to keep your money plans in check. You need to work together to keep those savings off-limits.
The average American retires at the age of 63 and needs $1,060,751 in savings to live comfortably. This assumes monthly withdrawals of $5,000.
Work Together on Disagreements
The most important thing for couples diving into a financial relationship to remember is cooperation. When you work together and discuss things before they turn into a crisis, you’ll have more luck with your spending and savings.