This post is sponsored by First Alliance Credit Union
Marital Bliss Comes From A Surprising Place – Your Money
If you ask most people about what it takes to make a relationship work, you’ll get answers such as arranging regular date nights, telling your partner you love them every day, and maybe just washing the dishes a little more often.
One of the answers that doesn’t come up as often is discussing finances and money. This is understandable, but it’s also a shame, especially since an incredible 70 percent of married couples fight about money–way more than any other topic.
Money matters. If you want your relationship with your partner to be the best it can be, you need to be on the same page financially. Fortunately, there are some steps you can take with your partner to achieve financial harmony, whether you’ve just started to get serious or you’ve been married for years.
Set Your Financial Goals As A Couple
One of the first steps any couple should take when talking about money is trying to understand each other financially. If you have your heart set on buying a sports car and your partner wants to build up your savings to buy a new house, for instance, you’re going to run into problems if you don’t talk about which goal should take priority.
Take some time to sit down with your partner and talk about both of your financial goals, whether you’ve just started to plan your future together or you’ve been married for years. This might seem uncomfortable, and to be fair it probably will be. Most Americans have been raised to not talk about our finances with anyone, and when you tell someone your dreams, you always run the risk of them not taking you seriously, or telling you why your dreams aren’t worthwhile.
Having said that, you shouldn’t hold back when talking about your financial goals. This is the time to trust that your partner respects you and cares about you and what you want. You can begin the conversation by discussing the different things each of you want in life, and from there move into talking about both of your financial goals.
Once both of you have talked about your financial goals, you can start prioritizing them. You can start by looking at the goals you have in common. For instance, if both of you have the goals of wanting to have a big house, three cars and annual season tickets to the Minnesota Vikings, you might want to prioritize getting the house first and only purchasing season tickets if the odds are good that the Vikings might make it to the playoffs that year.
While you’re prioritizing your couple goals, you shouldn’t neglect your personal goals. If you want to get an MBA to improve your marketability, or you’ve had your heart set on visiting Paris at least once, you need to let your partner know.
In many cases, you can work towards these goals at the same time while working towards your goals as a couple, while in other cases you might even want to prioritize your personal goals over your couple goals. If you’re working toward getting an MBA, you and your partner might decide to prioritize that and start saving for a new house after you’ve gotten your degree—and a better job.
While there’s no hard and fast rule as to how to prioritize your goals, there are a few guidelines that can make the process easier.
The first guideline is to make your goals SMART—Specific, Measurable, Attainable, Realistic, and Time-Bound. If you want to buy a new car, for instance, figure out what kind of car you’d like to buy (Specific), how much money you’ll need for a down payment (Measurable), how you’ll be able to save up that money (Attainable), whether or not you’re able to put aside any money for a new car right now (Realistic), and how long it will take you to save up that money (Time-Bound).
First Alliance Credit Union has a SMART goals worksheet that can make this process much easier.
After you’ve looked at your SMART goals, you can start to sort them out by how long they might take to achieve. Short-term goals are goals you can expect to achieve in the next five years, while medium-term goals might take longer to achieve, about 10 years. Any goals that will take longer than 10 years to achieve are long-term goals.
Once you have your goals sorted into these categories, you can prioritize your goals in each category and use the different time frames to start planning when you want to achieve those goals. Buying a house might be your most important goal, but you should be able to also save up for a trip to Paris without derailing your house goal.
No matter what the goals are, you should think about how to make sure both sides are comfortable moving forward. At the end of this discussion(s), you will not only have a better idea of how to allocate your finances, you’ll also have a better idea of who your partner is.
Decide How You Want To Manage Money Together
Once you and your partner have set your financial goals, the next step should be deciding how you want to manage your money as a couple to be able to obtain those goals
You can start the discussion by talking about what roles both of you will take. Talk about who will pay the bills, who will monitor the accounts and who will keep track of the monthly budget.
If you need help creating a budget, First Alliance Credit Union has a beginner’s guide to budgeting, as well as a free downloadable budget calculator.
While you’re talking about this, remember that these tasks don’t have to be either/or. Both of you might want to manage the bills together, or each of you might want to be responsible for certain bills. Also, consider that everyone has their own financial strengths and weaknesses. Divide up the tasks in a way that plays to both your and your partner’s strengths.
Keep in mind that you’ll probably want to revisit this topic every year or so. Remember that finances can change, and so can people. You might want to take on more responsibility for yourself, especially if you see your partner struggling in one area. Alternately, you might want your partner to take on more of the financial responsibility, especially if your job (or distance learning) is demanding more of you.
You’ll also want to talk with your partner about whether you should get a joint account together, have separate accounts, or both.
Having a joint account with your partner has several advantages. The most obvious one is that it’s a great resource for a couples’ financial goals. It gives you and your partner a central account you can use to save for financial goals, pay bills, and dedicate funds to you as a couple. It’s also easier to see your partner’s financial habits, which makes keeping secrets harder.
A joint bank account is also one of the ultimate symbols of togetherness. This can be a huge emotional boost for couples. In one study of 1,000 couples, 65% of the partners who had combined their bank accounts and financial resources were happier in their relationship.
However, having some financial independence isn’t a bad thing, so you may also want to keep a separate account for yourself. You can still contribute to your shared expenses and goals while still having a significant amount left over for you and your personal goals, especially if you would like to buy some big-ticket items. Just make sure your partner knows what you’re planning.
It’s important to reiterate that there is no one-size-fits-all solution. Everyone is a little different, so you and your partner should come up with an approach that works best for you. Make sure to play to your strengths, make sure you’re comfortable with the arrangement, and make sure you’re both confident in your final arrangement.
Invest In Your Future Together
Two of the best things about being a couple are dreaming about all the cool things you’ll get to do in the future, and doing things with someone you love. Investing in your future together combines both of these.
The first step toward investing in your future is building up your savings as a couple. If you’ve already gotten started on this, take a second to congratulate yourself!
If you haven’t started saving though, don’t worry—it’s never too late to start. The best way to begin is by putting aside 10% of each paycheck, preferably into a joint account you and your partner own.
Your first savings goal should be to build up an emergency fund that will help cover any situations from getting an emergency tow, to paying a medical bill. Ideally, you and your partner should each try to have between three to six months’ worth of salary in your emergency fund.
Once you have your emergency fund taken care of, you can work with your partner to move toward your financial goals, the ones that you discussed during the “Set Your Financial Goals as a Couple” section. Here’s where all the work you put in pays off.
Go through your top priority goals again and make a solid plan of how you’ll achieve each one, taking into account whether each goal is a short-, medium-, or long-term goal.
If you’re saving for a short-term goal, you’ll want to stick with a savings account. Once you have around $2,000 saved up, you’ll want to start looking into a money market account. You’ll get a higher rate of interest, and you’ll also have more access to your money if you need to act quickly to take advantage of an offer, such as an auto sales event or the right used car arriving at the right time.
Planning for a medium- or long- term goal, on the other hand, you’ll want to start looking at investing your money until you have enough to achieve your goal. Investing is a much too complex topic to cover here, but in general you’ll want to look at safe investments that can also provide a high rate of return. Start by looking at index funds, mutual funds, and include IRAs and Roth IRAs if you’re planning for a very long-term goal, such as retirement.
If you want more help in saving for future goals, check out this Beginner’s Guide to Saving Money on the First Alliance Credit Union website. It gives you easy-to-follow, common-sense advice about how to get started saving, strategies to ensure you save money each paycheck, and how to start saving to achieve your financial goals. First Alliance also offers a savings goal calculator that helps you figure out how much to save every month in order to meet your goal.
Talk About Money Regularly
Once you’ve taken care of all these steps, take a second and rest. You’ve earned it!
However, this doesn’t mean you and your partner never have to talk about money again. You’ll want to sit down with your partner repeatedly, about once a month at first, and just talk with them about how they feel about finances and review your budget together.
You could start off the conversation by discussing what bills have been paid or if there are any fun purchases you’d like to make in the coming weeks, and then talk about other subjects, like if your electric bill has gone up over the past couple months or if you need to take the car in for repairs.
Of course, the financial discussion shouldn’t be all doom and gloom. You can also talk about where you stand with your financial goals, what you want to do with any bonus you receive, and even plan for any vacations you want to take. Just remember that by the end of the conversation, both of you should have a full picture of where you stand financially, and that you’re working well as a team.
One important thing to remember when talking about money with your partner is this: don’t keep secrets from them. While this advice obviously applies to topics like credit card debt or losing your job, you should also let your partner know if you have any new financial goals you’d like to pursue.
Doing this regularly can strengthen your bond as a couple. After all, you really need to trust that your partner won’t judge you for wanting to do new things, and that they won’t jump down your throat if you find out you’ve spent a bit more than you should that month. In return, you need to make sure you’re being equally as kind and nonjudgmental to your partner.
Find Financial Harmony With Help From First Alliance Credit Union
No matter how long you’ve been with your partner, knowing where you both stand financially can be a key factor in your relationship’s success. In order to do that, though, you need to communicate with your partner, as well as trust that they’ll treat you and your financial goals with respect. Making this effort is an important step in helping your relationship thrive.
If you’d like to have some help getting your finances in order, set up an appointment with a First Alliance Credit Union advisor today. They’ll look over your and your partner’s finances and help both of you come up with a financial strategy that works for you, your current situation, and your financial goals.
