In relationships, communication is key. That's especially true when it comes to one of the biggest challenges for couples – managing money. For many, money is a taboo subject, which is probably why it's among the leading causes of divorce.
Couples that successfully manage money together take some important steps, which include:
- Talking about money. Sit down with your partner and discuss your mutual feelings about money and your goals. Be prepared for full disclosure about your debts, income, and challenges. Honesty truly is the best financial policy.
- Opening a joint account. Arrange to have your paychecks deposited in a joint checking account and pay your expenses out of that account. This ensures you're both fully aware of your joint income and expenses.
- Creating a budget. Tally up your income and bills and create a monthly budget. Work together to decide what to do with excess funds in your budget. Your budget discussion should include your expenses (rent, mortgage, car payment, etc.), as well as wants, such as gym memberships and vacations. It should also include the amount of money you will allocate for savings.
- Having their own money. As part of your budget, you could each set aside your own money for things that are important to you. Work together to determine the amount of money you need. Each of you may want to maintain your own account for that money.
- Building savings. Have a portion of your monthly budget automatically saved each month in a joint account. Make sure you have at least six months of living expenses saved in the event you experience a financial setback.
- Discussing retirement plans. The earlier you can discuss your plans for retirement, the better. Talk about what you envision your retirement to be like. What are your goals? Where would you like to live? Then, meet with a financial professional to put together a financial plan to determine how much you need to save to get where you both want to be.
- Having regular check-ins. Carve out time each month to review your finances, progress, goals, and changing needs. Again, be honest and open. If something isn't working for you or your partner, talk about it and brainstorm ways to adjust. Also, make sure to celebrate your successes!
Like all relationships, the relationship you and your partner have with money requires work, but with strong communication and mutual commitment, you can build a better financial life together.