Do you find yourself arguing with your partner because of money? Believe me, you are not alone. A 2017 study by Dave Ramsey shows that 86% of couples who got married in the last five years started in debt. A Fidelity Study, Couples and Money, more than half of the couples surveyed carried debt into their relationship, and four in ten of those couple admitted it had a negative impact
With proper planning and communication, a couple can eliminate this stress from their marriage. This article will discuss 4 things that you can do to avoid money conflict in your relationship.
1. Communicate openly and honestly
You should develop a level of comfort with your partner to have an honest discussion. While many individuals believe it is too awkward to discuss money, especially in the early stages of a relationship, it is important to begin normalizing these conversations. You both need to be open and honest about your credit and debt and how you are currently managing it. Some of the things that you can do to create a better communication channel are:
- Get on the same page about your spending habits
- Decide if you will have your accounts jointly or separately
- Discuss how you will manage individual debt
- Be clear about your relationship with money. Where you are now and where you want to be
- Seek a financial coach to assist you
Having a financial coach is the most streamlined way of addressing your finances and getting on the same page. Even if you manage your money differently, you can create a framework for how you will be able to accomplish your short and long-term goals.
2. Make budget as a couple
Making a budget with your life partner is basic in dealing with your household finances. Your budget does not just allow you to plan and track where the money will be spent, however, it gives you the power to coordinate the course of your finances together.
- Identify all your expenses, combine duplicates and eliminate the unnecessary ones
- Your budget should be realistic or you will never use it effectively
- Schedule a standing budget meeting where you discuss how things are going. Course correct where necessary.
- Talk about your expenses more often – for example, decide on a dollar threshold that you will not go over before first having a discussion
3. Save money
Get into the habit of paying yourself first. You never know when the unexpected will happen, therefore you always want to ensure that you have at least three to six months of expenses set aside for an emergency. If you currently do not have those savings, develop a plan with a specific timeframe and strategy around how to accomplish this goal.
Here are a couple of approaches to begin setting aside cash and save money:
- Monitor your spending every month.
- Cut off your unnecessary spending.
- Add to your retirement plan
- Find a side gig that you bring in some extra income and dump it into your savings
4. Invest and grow your wealth
Begin exploring different investment options. Learn about mutual funds, index funds, and exchange-traded funds and how you can use them to grow your wealth. The stock market and investing in real estate are also a great way to generate meaningful investment returns.
By creating a personalized financial freedom plan, you are well on your way to normalizing the discussion around money and creating long term goals. Remember that a relationship has lots of dynamics and most times two individuals are coming with a completely different mindset about money. As I discussed in this article on , Shifting your Money Mindset by breaking up with your negative money block, many people have negative beliefs about money. Where are you in your belief? You may need to work on your money story individually while forging a way to have the conversation and do the hard work to avoid being one of those couples whose relationship is negatively impacted due to debt.
Tanya Taylor, CPA, MBA is the founder and CEO of Grow Your Wealth. Her mission is to help 1 million professionals and business owners ditch bad debt and create a 6 or 7-figure retirement income by learning how money works in 6 steps so that they can build a legacy without feeling stuck.