Talking Finances With Your Significant Other
Nov 27, 2017The number one reason couples split up and ended in divorce is Money.
One reason is that they have a different point of views on how to manage the finances. The other reason is that they both have weak money habits and cannot handle it correctly.
The lack of communication in a lot of couples could create more debt in the household. Why? Because where there is not a good communication, it creates a void. And most likely, shopping, things will be filling up the emotional gap.
Ask Yourself:
Are there any secrets when it comes to finances within your household? Sometimes one of the spouses doesn't know what the other is either spending or saving. A lot of times, one of them don't know what the other's income is.
They do talk about money, but not openly and honestly.
- I know couples that purchased things behind the back of their spouse.
- I know couples that one of them have a secret savings accounts because their spouse is an emotional spender.
- I know couples that only one is in charge of their finances, leaving the other spouse in the dark of what is really happening.
- I know couples that have no idea what they owed or what they spend on a monthly basis and overspend more than they make every single month.
There are three steps to regain the communication regarding money and finances, and most likely, this will save the relationship as well.
Step One: THE NAKED TRUTH
The truth will set you free. It is time to come one hundred percent clean with your other half. You both need to sit down and look at your finances for the past six months and see where the money has gone.
Also, look at ALL bank accounts, retirement accounts, credit cards and every bill that you both have. Then compare, how much is going in and how much is going out.
After that, my suggestion is to do a 5-year financial projection on where you will be if you keep doing what you are doing. Don't forget to take into consideration the compounded interest in all of your accounts.
Step Two: SPENDING PLAN
It is not how much you make, it is how much you spend. A lot of times couples just look at what comes in the bank account, but not what it is needed to be pay. Therefore, they spend their money on things, (that they probably don't need) and end up in red numbers at the end of the month.
If you create a spending plan and cut back your spendings (on stuff) by 75% you will be able to use the money to either pay off debt or put it on an emergency fund and retirement accounts that will allow you to keep the lifestyle for the rest of your life.
But for this, it is required a lot of discipline. As a rule of thumb, here is where the money should go on a monthly basis.
35% to Housing (mortgage or rent)
25% to Living Expenses
15% to Transportation
15% to Debt (If you have debt, if not, this should go to savings)
10% to Savings (If you have debt, if not, 25% to savings)
It does take planning, but the rewards are worth it. And if you are far from this rule of thumb, it is time to have a wake-up call.
Step Three: TEAMWORK
Teamwork makes dreams work. It takes both sides to build a bridge. Being open about the finances and communicate with each other, will only strengthen the relationship. Also, working on setting up expectations and how the money is going to be distributed will create balance as a couple.
One thing to help with this is, if, for example, there was only one in charge of the finances, have the other half take care of it for a week. In the end, this is a partnership and a two people job.
Also, plan something that you can do for each other. Sometimes, doing simple things are more lasting memories than splurging away. A nice home candle dinner, massages for each other, reversal of each other's household chores, playing card games or board games, going on a picnic to the park, and/or a walk on the beach are just examples of things that you can do that will rekindle your relationship.
In the end, it is all about communication and about how much you care about the relationship and achieving the things that matter the most instead of the things that are available right away and you don't really need. Together you can have anything you want, only together.
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