The number one source of conflict in a marriage is money, but it doesn’t have to be that way. For every couple that fights (and even breaks up) over money, there are couples who work together to handle their finances well. Of course, there will be conflicts over money if you don’t have a plan for your finances and get on the same page about how to spend the money you each bring into the marriage through jobs, child support, alimony, pensions, etc.
Here are some financial planning tips for couples to help you avoid money fights and the chaos that can come from not having a plan.
Read more: Marriage and Finances: How to Beat the Odds
1. Talk about your goals and priorities.
Before you can even make decisions about how to spend the income that comes into your household, it’s important to talk about your goals in life and what you both value most. The way you spend money will be directly tied to your goals and values, so getting them out on the table first will inform the way you budget and plan your finances.
At times, your goals will be very different from your partners’, and the first step to making a plan you both can live with is to talk about those differences and how to bridge the gap. While it may seem impossible to make a financial plan when you both want different things, it can be done through compromise and an effort to make sure that you both get as much of what you want as possible.
2. Assess your spending styles.
Are you a saver or a spender? What about your spouse? Maybe your relationship so far has revealed these tendencies, or maybe you need to consider how you both measure up on the save/spend continuum because it can impact your budgeting efforts. Differences in spending styles can cause problems like the saver trying to control the spender or the spender being unable to abide by strict budgetary limits, so dealing with these tendencies is an important step to making a budget work.
3. Track your spending.
Making a budget won’t do you much good if you don’t know how much you are spending on different budget categories, like groceries, clothing, or eating out. Track these categories and any others that aren’t fixed each month to see how much you are actually spending on them so you can figure out how much to allocate to them in your budget each month.
You may think you know how much you’re spending, but remember last month when you were $100 short in your checking account and couldn’t figure out where the money went? The natural tendency is to underestimate how much you’re spending, so seeing it in black and white not only gives you the real numbers, it can also serve as a check on overspending when you know how much you’ve already spent.
4. Make a budget.
You can sit down together to do this, or one person can make a rough draft and the other can look at it and provide feedback on things that may need to be changed. However, you do it, making a budget is crucial if you want to ensure that you live within your means and know where your money is going.
In its most basic form, a budget will tell you how much income you have and where that money is going to go. You can budget monthly, weekly, or by the pay period using an Excel spreadsheet, budgeting software, or a piece of paper and a pencil–whatever you feel comfortable with that works best for you as a couple. There are tons of budgeting apps and tools you can use.
5. Define who handles what.
It may be that one person is more comfortable making budgets and balancing checkbooks, and if both of you are comfortable with that person handling the finances, that may be what works for you. You can also take turns each month, have a monthly finance meeting where you deal with finances together, or split up tasks, like having one person pay the bills and the other person balance the checkbook and handle yearly taxes.
6. Keep everyone in the loop.
What you don’t want to do is give one person all the control over financial aspects of your life while keeping the other person in the dark about them. At the very least, the person handling the budget and bills should be keeping the other person well-informed about how the money is being spent, including debts, credit cards, assets, and investments.
It may seem to make sense at times to keep secrets about money from your spouse, especially if they’ve been less than responsible, but these secrets have a way of coming out and can ruin the trust a good relationship is built on. Money secrets that are eventually discovered can lead to arguments and other problems.
7. Plan ahead.
Good financial management needs to be more than a monthly budget. Some expenses come up yearly and must be planned for in advance. Christmas gifts and vacations are two examples of these recurring yearly expenses. Couples need to talk about how they will pay for these and other expenses. Sometimes savings needs to happen over years, like for kids’ college educations or weddings. Having a plan will prevent you from going into debt or just not having the money to do what you want or need to do.
8. Make adjustments.
Financial planning can’t be done once and then never changed. Over time, your goals may change, and your circumstances may also change. Re-evaluating your situation and adjusting your financial plans will be a necessity and can even be done each year so that you are prepared for whatever may come.