Not Answering These Questions About Money Can Lead to Trouble For Couples
By Victor Ochieng
When you’re still single, you run your expenditure and investments your own way. You decide on how much to spend on rent, food, and clothing, among other needs. The way you manage your finances and assets is all about what you deem fit. However, things change when one gets into a relationship and eventually gets married. You no longer have the luxury to single-handedly make all the financial decisions.
To ensure that things work out smoothly, below are some questions you need to answer;
What’s your current financial state?
Before you go into how much you need for the family, it’s important to let your partner know your current financial status. Some of the things you’ll need to disclose are bank account balances, business interests, investments, retirement savings, and real estate ownerships. You’ll also need to disclose your liabilities so that the two of you can establish your joint net worth.
What’s your budget and who’s going to take care of what?
It might be a challenge establishing what the two of you need going forward. As such, you can spend the first three months after moving in together to ascertain your joint monthly expenditure. Having that, including the bills, the two of you, based on your monthly earnings, can then agree on who will handle what. If, say, one of you is more interested in financial management, he or she can then be entrusted with that role. However, both partners must allocate time each month to look into the financial situation, pay bills, and see if there is need for any adjustments. Where necessary, you can engage the services of a financial adviser at this early stage so that you start on the right track.
How do we create a budget and stick to it?
Not everyone is good at formulating and sticking to their budgets. Some are more prone to impulse buying but managing finances jointly makes things a lot easier. After drawing your monthly and annual budgets based on fixed costs and other utilities, check on the amount you may need for discretionary spending such as buying extra clothes, hanging out, or travel. The two of you must come forward to table what you believe forms your discretionary spending so that everything is taken care of in the budget. Once the budget is complete, include some extra money for contingencies. You can make use of some apps such as Level Money or BillGuard to help you track your expenditure in relation to your budget.
Are you planning to run individual or joint accounts?
For transparency, some couples decide to run a joint account to control spending, while others prefer to maintain their individual accounts and only finance their joint budget from there. For some couples, however, maintaining their individual accounts alongside a joint one works best. In such a case, each couple transfers money needed for joint expenditure into the joint account. This could be done by sending all money to the joint account except a small percentage for some level of autonomy.
Do you share financial goals?
Different people have different financial goals in life. Because of that, new partners are encouraged to share their financial goals so that they can agree on what to prioritize. When going into such a discussion, you must go with an open mind to listen to your partner and be candid about what you think. This will help you transition from individual goals to family goals so that you both zealously pursue your shared financial goals. The two of you should create a joint investment policy statement and a clear financial plan.