Money causes friction in millions of marriages worldwide. Very often, it’s due to a lack of planning and a mismanagement of finances. If one spouse is a saver while the other is a spender, you can bet they’ll be at loggerheads too.
Before even getting married, it would be a good idea to spend time discussing finances with your partner. Once each party knows where the other stands on money, it will be easier to plan your finances. Either way, the pointers below will help you.
Have 4 separate accounts
The most basic way to organize your finances will be to have 4 accounts:
- For him
- For her
- For expenses (joint account)
- For the future (retirement, emergency fund, etc.)
The reason why couples often squabble over money is because there’s no real demarcation in their accounts. When you have 4 separate accounts, this problem is eliminated.
The ‘For expenses’ account
If both parties are working, there will be a pre-determined amount that each person contributes to this account. It could be an even split or the one who earns more could contribute more.
The money saved in the ‘For expenses’ account will go towards paying the household bills, groceries, etc.
Having a joint account here will help so that both partners can see the withdrawals and deposits.
The ‘For the future’ account
This account is for savings. Once again, each person will need to decide how much they can contribute. The goal should be to save up 3-6 months’ worth of income for an emergency fund.
Once that money is saved up, it should be deposited into a certificate of deposits (CD) account so that it earns higher interest than what it would get in a savings account.
Any amount saved over and above that should be put aside for retirement, investing, etc.
The ‘For him’ account and ‘For her’ accounts
Once both parties have contributed, what’s left in their accounts is for their own discretionary spending. Neither party has the right to tell the other what they can or cannot buy.
Of course, there must be discipline in the spending. The goal is to NOT get into debt. If one partner spends excessively on their credit cards, they’ll sink deeper and deeper into that.
Then contributing to the expenses and retirement accounts will become extremely difficult. This will then leave the other partner to pick up the slack. They may feel burdened and become angry at the unfairness of the situation.
This is why both parties must be in alignment when it comes to spending habits. It’s fine to treat yourself every now and then, but sinking into debt for immediate gratification is the surest way to financial ruin.
Other factors
Coming into a marriage, one or both parties may either have student loan debt or other debt. The goal should be to always pay off the debts. Whether one spouse helps the other or not will depend on their own arrangements.
What couples don’t understand is that when you marry a person who is in debt, in a way, their debt becomes yours too because it will affect the finances of the family.
Another point to note: some families may have a sole breadwinner. If it’s the husband, he’ll still need to open a bank account for his wife and deposit money for her own use in there. This will prevent embarrassment and indignity where one party needs to ask the other for money. The same works vice-versa.
Besides the 4 accounts above, you may also wish to set up an extra one or two accounts to save up for vacations, big purchases, insurance and so on.
The goal here is to keep your finances separate when it comes to discretionary spending, but have a joint account when it’s the bills and living expenses. Keep your accounts organized and if both parties spend and manage their money responsibly, money problems will not be an issue.
In the event where despite your best efforts, money is still tight then it will probably be an income issue. Both parties will need to find a way to increase their skills so that they can boost their income and combat the rising cost of living.
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