Do you and your spouse talk about money and finances? This hot button issue can definitely put a strain on your relationship. In fact, a recent study shows that money fights are the second leading cause of divorce for couples, only coming in behind infidelity.
Something that is so important within a relationship should be something that we focus on and learn how to effectively communicate about. I recently had the opportunity to be a panelist on Experian’s #CreditChat on Twitter (you can join in the discussion LIVE at 3pm EST every Wednesday). We discussed the topic of couples finance:
How often should couples have “the money talk?”
Couples should talk about money often and as their financial situation changes. It shouldn’t be a touchy subject only limited to only talking about money problems. Make talking about money more of a way of life. Don’t look at it as a massive problem that should be dreaded. Start out by sitting down with your spouse and creating a budget. You must first figure out what your current situation is and determine answers to these questions:
What are your current income and expenses?
How much money do you have left over each month?
Do you have money allocated to savings or retirement?
What financial goals do you have— short term and long term?
Review your budget yearly, but more often if needed. You might find that when you are first starting out, you and your spouse will need to review your budget monthly to make sure that you are staying on track.
Should couples combine finances, manage them separately or a little bit of both?
Couples can have joint or separate accounts, whatever works in their relationship. There are no defined rules when it comes to this. I personally suggest joint accounts once couples get married. Opening joint accounts can help to make finances more of a team effort— and you definitely need to be moving toward your financial goals together. Being on the same page when it comes to attitudes toward spending, saving, and debt, will decrease tension within your relationship. Regardless of how you decide to split up accounts and bills, or whether you combine them, each partner should be aware of what is going on. There should NEVER be any secret accounts! Be open and honest with each other about money.
How do couples with unequal incomes contribute fairly?
Most couple don’t make exactly the same amount of money. Both partners must realize that if one spouse is staying home taking care of kids, there is value in that. Fairness in a relationship is not about only contributing financially. Again, you must work toward financial goals together—as a team. You may both have different incomes and responsibilities, but when you have the attitude that you are working through it together, you don’t let feelings of bitterness and inequity take root. If you are more worried about who is paying which bill and making sure that it is exactly equal, your relationship probably won’t last.
If one of you has a large amount of debt coming into the relationship, decide how that will be handled from the beginning. Perhaps keeping those types of debts separate is ok so that one partner isn’t taking on debt that isn’t theirs.
How do couples decide who pays for what?
If married and accounts are joint, this is easy because you are pulling from one pool of money. If you aren’t ready for joint accounts split the joint monthly bills and continue to pay for individual accounts/ debts separately. If you are in a relationship in which debt has been acquired unequally—perhaps one partner has college loans and the other does not—it may make sense to keep those separate from joint bills. However, entering into a marriage means that if you are truly going to share your life with someone, the idea of his and hers separately needs to be set aside. Working together as a team in regards to finances (and every other area) is critical to a successful marriage.
How can credit affect couples with significantly different scores?
A big difference in credit scores may mean a big difference in spending habits and attitudes regrading money. It may not matter at first, but when one spouse has trouble qualifying to buy a car or a home because of low credit score, that could strain the relationship. Finding out your partner’s attitude toward spending and debt is something that you want to know early on. Opposites may attract when it comes to personality, but opposite attitudes about fundamentals may end up causing contention.
How can couples improve their scores?
There were several things that couples can do to improve their finances:
Pay your bills on time. Pay down credit card debt and maintain low balances on credit cards. Don’t open too many new cards at once. Keep some older accounts open and active. Check your report to make sure things are accurate. For a more in-depth look at credit repair, check out my article on 5 credit repair tactics that will quickly increase your credit score.
What is the most one partner can spend without consulting the other?
Give yourselves an allowance each time you get paid. Then you both have spending money. This can work out nicely for incidentals and smaller purchases, however, you should set a dollar amount that you would need to consult the other about before making a purchase. This amount will vary depending on your budget and what you are both comfortable with, and if your financial situation changes, you may find that you need to change this amount accordingly.
Should one partner be designated to be in charge of financial planning for the family?
Sometimes one spouse is more interested in the financial matters, but it is important for both partners to be involved. Both partners should be in on the financial planning. There should never be a point where one partner isn’t aware of what’s going on with the finances. Keep the communication lines open in all areas of your marriage, including finances.
When should couples consider seeking financial counseling?
Hopefully you and your spouse can set some boundaries and figure out a way to talk to each other about financial matters and spending habits without arguing. However, if you end up fighting every time you talk about money, it might be time to seek a financial counselor! Learn strategies about how and when to share with each other about finances in a healthy manner.
Understand that you may disagree, but instead of trying to come up with a retort or a defense of your actions, listen to what your partner is saying. How each of you feels about budgeting and spending your money is important. When you are at an impasse, realize that there will need to be compromise. From there you can prioritize based on financial needs.
Top Tip on maintaining financial health as a couple?
Communication is key. Talk about finances when you both can devote the time to it. Don’t judge. Don’t keep secrets. Revisit your budget at least quarterly to make sure you are working toward your goals. If you want a healthy relationship, here is how NOT to talk to your spouse about money!