Let’s be honest, one of the toughest transitions into adulthood is figuring out finances. Most children and teenagers aren’t responsible for their own financial well-being, so adulthood can be quite the wake up call, am I right? In most cases, no one is going to tell you how to spend, or save, or manage your money as an adult, so the responsibility of your financial well-being is up to you.
But what about when your financial choices effect people than just you? How do couples manage finances? Learning how to manage finances in a marriage, or a serious cohabitant relationship, adds another layer of complexity. It’s not just a pragmatic exercise of discipline and planning – it’s a relational, often emotional experience. It’s takes navigation. Communication. A little more planning.
Managing finances is also one of the main things that couples fight over, and break up over. So how do couples manage finances effectively, and thrive? My wife and I have had to figure this out through a long, growing process, (which we’re still trying to perfect), but here are 10 solid tips for managing finances that you NEED!
1. Communicate To Get On The Same Page
This is the first and most important step. TALK about your finances, and share your opinions about how you think you should manage them.
It’s very likely that you and your significant other come from different backgrounds and baselines. This usually results in different financial habits. It’s important that you have respectful conversations about this, and that you go into it expecting their thoughts, habits, and opinions to be a bit different from yours. Having a conversation like this may reveal that you’re on 2 VERY different pages. But it’s the first step to getting on the same page.
When you merge your financial management with your significant other effectively, managing money as a team can help you achieve your goals in record time. What financial hopes and dreams does your partner have? Which of you knows more about investing? What kind of risk are they comfortable with (e.g. a #gamblingproblem is something you may want to talk over)? You need to learn each other’s spending habits!
Even if you don’t agree with your partner’s approach, never treat them like they’re stupid. Explain each side, and if your spending habits are causing your partner a lot of stress it might be time to reassess them.
Healthy and regular communication is a deeply essential part of EVERY area of a relationship. Financial management is no different.
2. Force Yourselves To Make A Budget
Creating a budget takes work, and sticking with it takes discipline. Don’t let this deter you! Making a budget is also one of the most important things that you can do as a couple!
You can easily create a budget on Excel spreadsheets, or a shared source like Google docs. There are also phone apps like Mint (by Intuit), and HoneyDue, which will help you automatically track your budget, spending, and saving. These apps are GREAT because you link your cards to it, and share it between 2 people. This will help you and your loved one track your budgets easily!
Here are the top 7 advantages to budgeting as a couple:
– it reduces conflict (and stress) to keep a budget
– it helps you prevent overspending
– it helps provide peace of mind and security to have money allotted for emergencies/slush fund, etc.
– it will help you keep track of tax info
– it will help you live within your means, and shape your lifestyle
– it makes goal setting easier
– it helps you stay on the same page (or app). Literally.
3. Give Yourselves An Allowance
This is one I learned from my parents.
Spending can be a huge cause for conflict! If one of you likes to spend more than the other, this can be a source of frustration, or even panic. One of you may like to indulge often in a favorite hobby, while the other may prefer to save up for something big that they’ve always.
By putting an allowance into your budget, it helps to keep everything fair. Set an equal amount to split between your 2 allowances, and that amount can be spent on anything you want. It limits each of you, but it will allow you to both use your spending cash however you want without judgement.
4. Prioritize Paying Down Debt
Unless you’re one of the rare couples that goes through life without any debt, it’s going to be a fact of life. Make defeating debt one of your biggest financial goals as a couple! Finishing off debt as quickly as possible will save you thousands in the long-run, and frees your money up for better investments.
There are a lot of creative ways to finish off debt more quickly than you would expect! My wife and I paid off $42,000 of debt in only 19 months. Sound crazy? Read the post in that link above to see how we did it, and you might be surprised at how easy it is to follow in our footsteps.
Paying off debt is a good investment because it has a guaranteed return. Unless you know how to invest your money in a way that can grow WAY faster than your debt, it makes more sense to pay down something that is growing interest. Student loans, credit card debt, and other similar debts accumulate interest on the principle, and this stacks against you if left unchallenged.
There are a lot of ways in which couples can defeat debt together. Encourage each other to prioritize it, set milestones and goals, work on your own side hustles, etc. Sometimes it’s wise to tackle one person’s debt at a time. We focused on my wife’s $18,000 of student loans first. When it was finished we were then able to turn and pay down mine. This made it less overwhelming.
Your partner is also your teammate, which is a huge advantage! You may both bring debts into the relationship, but you’re also united in beating it. Don’t forget that!
Finally, couples can beat debt by keeping each other accountable. Certain debt is totally preventable! Credit card debt, in particular, is usually avoidable if you just live within your means. Hold each other accountable to make credit card completely unacceptable to you!
This leads into my next point…
5. Actually Live Within Your Means
…. speaking of credit card debt, it’s TERRIFYING how rare it is for couples to live within their means. Of course, this often stems from the individuals in a relationship bringing in their own bad habits, but seriously…. remember to ask yourself if you actually need each thing that you buy.
Am I suggesting you never indulge or do anything fun? No way! But eating out, buying expensive stuff or gifts, feeding expensive hobbies – this should all be measured against your budget and your income. If you can’t realistically afford those things you desire (but don’t exactly need), then discipline yourselves to forgo them together until a later season of life where you can afford it.
This is part of why your budget will be so important.
6. Stop The Slow Bleeds
Once again, this is an area where a budget comes in handy. One of the biggest ways that couples get into financial trouble is because they have too many slow bleeds that they’re blind to.
Slow bleeds are usually in the form of subscriptions. Subscriptions are HUGE now, because companies are realizing that they can get a lot more money out of their customers this way. Being charged $360 for something sounds expensive! But when it’s being presented as only $30 per month it doesn’t so bad. This can be a trap for a lot of people!
Do you have any subscription services that you aren’t really using? These slow drips really add up, and deplete your bank accounts badly.
Here’s an article from Forbes with lots of apps that can help you easily find these slow bleeds! These apps, like Mint (for example), will help you seek and destroy these deadly bleeds.
7. Save Money Where It Grows
Is the money that you’re saving actually growing? Don’t make the same mistake as millions of other couples that leave their money in stagnant, brick-and-mortar banks. If your bank has a physical location, than I can almost guarantee that it’s a useless bank for your savings.
Online savings accounts, like the ones offered by CIT bank, or SoFI, will pay close to 2.5% interest on your money. You can easily make over a thousand dollars per year just in interest with an account like this? Compared to the pennies you would make in a brick-and-mortar bank, it’s a stark contrast.
In addition to your safe savings account, there are many other ways that you can grow your money MUCH more dramatically.
There are almost too many different options for investing, and they all have their advantages. Do your research into what ways you can grow your money!
– An annuity is a conservative but safe way for you to insure a chunk of money will last through your retirement
– some indexed universal life policies (an IUL), allow you to safely invest in stock market indices and grow your money at over 10% without incurring risk
– investing in stocks can provide you with enormous (though sometimes risky) growth potential. I’ve found success by investing in stocks for free (no trading fees or commissions) through an app called Robinhood. It’s super easy to use, and is a great place to start for a beginner. I’ve made over 65% on a single trade by trading in penny stocks, which is far more than I’ve ever lost. By doing your research, and using the proper strategies, you can vastly minimize your risk.
– dividend paying stocks will not only offer you potential growth on the stocks that you own, but will pay you quarterly passive income too!
– alternative investments are unique, and by using an easy launch point like Yield Street you can find some of the most lucrative passive money growth in existence!
– investing in real estate, like rental properties, will sometimes (not always) take a lot of upfront capital. But it’s also one of the most time-tested, and solid ways to build passive wealth.
The point is, your money should work for you!
8. Learn The Art Of Discount Hunting
This is a true art, trust me! Like I mentioned before, I use various money saving/cash back apps and rewards programs to save over $3,000 every year. This easily pays for our trips to Europe, and other traveling!
So how do you do it?
I’ve written a couple helpful posts on how I do this, which you can check out below!
Here are just a few ways to save boatloads of money!
– Clip coupons from Coupons.com through Swagbucks.com. By starting at Swagbucks.com, and going to Coupons.com through it, you will not only find hundreds of discounts on coupons, but you’ll be paid an extra $0.25 on every coupon you redeem!
– Use the app Ibotta! This grocery cash back app can easily land me $20 in cash back every month on my grocery shopping. It’s easy to use, and worth the cash! Check out the review!
– Do ALL of your online shopping through Ebates. Almost every store gives you cash back through Ebates. You can save hundreds of dollars on your online shopping simply by visiting your stores through Ebates. It’s stupid easy, and you’re wasting money if you’re not using it. You can read a review here.
– Dosh is the easiest to use of all. By linking your credit or debit card to Dosh it will find cash back opportunities for you at various stores and pay you. Here’s a review of how it works!
– if you have the self-control to use it wisely, credit cards are the best way to buy anything. This is because you can earn cash back for every purchase on a credit card! I’ve made hundreds of dollars this year just through passive cash back on my Chase Freedom credit card.
– Another thing you will want to do is join rewards programs for any place that you shop at regularly. This is especially helpful for me when it comes to gas purchases. The Shell Gold rewards program saves me over $100 every year on gas discounts. YAS!!!
And these are just a few.
9. Use Indulgence As A Special Occasion Expression
If you’ve been paying attention so far, you know that I don’t hate the occasional indulgent expense. I firmly believe that it’s important to live within your means, but if you save the occasional expensive purchase for special moments as a couple it has a two-fold benefit! It helps you limit how often you make expensive purchases, but it also enhances the meaningfulness of your gesture.
You never want to be cheap when you’re giving a gift to someone you love! Even if you’re frugal in every other area of life (they call that being Scottish where I’m from), show your partner that they’re worth lavishing with some extravagance.
Overspending is terrible as a habit, but it’s beautiful as a unique gesture or gift. Your loved one is worth it! Just make sure that they’re comfortable with this kind of spending, even on special occasions. If you buy something expensive for your partner, and they still got you something cheap, they’re going to… well… feel bad.
Setting up an allowance is especially helpful for these kinds of things. Save up for a special gift for your person by using your allowance!
10. Set Goals
Setting goals naturally fits into all of these other categories, doesn’t it? Communicating with your partner, and making a budget, should result in your setting financial goals.
Having milestones to reach, and a common mission, will help you stay focused and motivated.
There are tons of different goals that you can set. Paying off debt. Saving for the down payment on a house. Establishing a side hustle, or a business. Investing. Cutting costs. All of these are goals.
Tackle one at a time, and master it! And most importantly, always communicate about these goals with your partner lovingly and respectfully. Listen as often as you talk, or listen more.
These are some of the best tips I can give you, based on my own experience with this Queen! Do you have some tips of your own? Any questions? Let me know in the comments below, fam!