Managing Your Joint Finances
People are getting married later in life now. More and more couples are waiting until after certain milestones are achieved, such as graduating from school or attaining job security. This means that more and more people are independently financially stable before merging their lives – and money – with someone else. That can spell trouble for a new couple; when two people who are used to spending freely without consulting someone else are all of a sudden asked to share financial responsibilities.
As a newly married woman, I have first hand experience with how difficult it can be to merge finances with the love of your life. We were both employed long before we met, and financially stable as independent people. Rationally, one might think that would mean we would be financially stable as a couple, but creating one budget from two independent ones is sometimes more difficult than it looks. No one can say what will definitely work for you, but here are a few tips to keep your heads above water.
Where Did the Money Go?
Even if you and your partner keep your joint finances mostly separate, you are still jointly responsible for rent or mortgage payments, food, and other shared expenses. When each of you are spending money from your joint accounts outside those shared responsibilities, you might find that your money is disappearing faster than anticipated. A good way to keep track of joint cash flow is to keep a budget somewhere you both can see and update it every time one of you spends any money.
We keep a dry-erase board on our refrigerator with categories like Food, Entertainment, Gifts, etc. and monthly denominations written under them. For example, we like to spend under $500 per month on food, so the Food category has $500 written under it. Every time one of us spends shared money on food, we subtract that amount from the monthly total. Needless to say, when it gets to the end of each month, we end up eating a lot of inexpensive foods such as pasta and Ramen noodles, but at least we’re within our budget!
Set Priorities Early On
Is it important to you both to save for a house? Go on vacation? Buy a new computer? Start planning for children? Regardless of your priorities, it is valuable to set your priorities with your partner early on. You both have hopes and dreams for your life together, and usually, those hopes and dreams cost money. No matter what you’re saving for, having concrete goals can help you stay on track.
It also helps to know how much you really need to save. $1,500 won’t make an effective down payment on a house, for example, but it can buy a really nice computer. Discuss your goals with your partner, and decide what to save each month, and how that savings will be used.
Be Open to Change
Your life together right now doesn’t look like what it will look like five, ten, or fifteen years down the road. Things happen and situations change, and for better or worse, it is ineffective to use the same budget when your joint finances situations are different. Your spending habits will not be the same when you are first married as they are when you buy your first home or have your first child, for example, and every subsequent change means a change in your budgeting. Don’t try to stick to the financial system that worked for you just because it had worked at one point. There’s nothing wrong with reevaluating how your joint finances are handled when your lives change.
Talk, Talk, Talk!
Communicate about your finances. I cannot stress this enough! If you don’t talk about where your money is going, what you dream for your future together, and how your lives are changing, it will be impossible to reach an effective decision on joint finances matters. It is frequently said that money is one of the main reasons couples split up, but taking the time to discuss your joint finances situation can help alleviate stress when it comes to spending and saving money.