The promises we make at the time of our Nikkah “For better or for worse… For richer or for poorer” This is what most of us promise to our spouse when we pledge ourselves in marriage. But unfortunately, the reality is somewhat different than what is promised at the rosy beginning of a marriage, what we see is many couples today can’t seem to survive either richer or poorer due to poor money management skills.
Studies done by Money magazine found that 70% of married couples argue about money ahead of fights about household chores, snoring and food. Another study found that the most common points of disagreement among couples when it comes to money are: major purchases (34%), a partner’s spending habit (23%) and important investment decisions (14%).
Money management can actually be a rewarding way to bond with your loved one. Here are steps to take and tips to make sure you get on the right track for a lifetime of properly managing your joint finances.
Money matters and it can also make some spouses even lie, cheat, and overspend, and cause all trust within the relationship to be a distant memory. As a newly married couple, how can you prevent these tragedies from happening in your own marriage?
There is definitely hope, but you need to act early. In fact,
Write Down Goals
After you have determined your baseline financial status, discuss your long-term financial goals in-depth. For example, do you plan to retire at a certain age? Do you want to get out of debt and become a millionaire? If you’re planning on hiring a financial advisor, these are the kinds of things they’ll want to know.
Build an Emergency Fund
If you don’t already have an emergency fund, consider making this a top priority. An emergency fund is a money that is set aside in case something expensive happens unexpectedly, such as a lost job, family illness, natural disaster, or a major home repair. Aim to save about 6 months’ worth of your household expenses in case the emergency is that you have no income. Building an emergency fund should be a priority because it will bring financial security and protect your relationship in case disaster strikes. This money should be kept someplace where it’s easy to access. I recommend a Savings account so you can earn a little profit from your funds.
Design a Budget
As I mentioned, one of my goals with my husband is to ensure that we are within budget each month. So we don’t go into debt, we limit how much we’re allowed to spend in certain monthly budget categories, such as food, dining out, and entertainment. Personal Capital allows us to really dig in and get a good idea of where our money is being spent.
Track Your Budget
It’s not enough to just make a budget. You need to make sure you stay within your spending allotment and adjust accordingly as your situation, expenses, or income changes. One very effective way to stick to your budget is to use the envelope budgeting system. This is perfect for young couples who typically have lower incomes and must be careful not to overspend.
Money management in a marriage is not about having a quick discussion with each other and then one person carrying the ball for the couple. It involves both parties working together and sharing responsibilities equally. For example, both husband and wife need to take part in decision-making, budgeting, and bill-paying.
Moreover, and we’ve seen this happen, if responsibilities aren’t divided and something happens to the “financial” spouse, the other spouse can be left clueless. Bills may go unpaid, debt may accumulate, and what once was a solid financial position can deteriorate rapidly. In the interest of preserving you and your spouse’s welfare, make sure each of you is aware of your entire financial picture and is in charge of managing a portion of it.
Work as a Team
To properly work as a team, you must have the same goals in mind. Work together to come up with ways to accomplish those goals. Always encourage each other and build each other up. Be aware of your own weaknesses and strengths, and play off the strengths of your spouse to bring synergy to what you are trying to accomplish.
Honesty is always the best policy, especially when it comes to money management in marriage. If you mess up or make a purchase you shouldn’t have, tell your spouse and own up to your mistake. Your spouse may be upset with you initially, but after he or she cools off will respect you and trust you because you were open and honest. Lying about money to your spouse has huge repercussions, including divorce, so don’t even think about going there if you want your marriage to last a lifetime.
Trust Your Spouse
Unless you determine that your spouse is indeed lying to you, trust your new spouse to handle money. Withholding responsibilities from your spouse or watching every move he or she makes is condescending and demeaning. Don’t ask how much money your spouse spent or made during the day. Learn to let go of the control and just trust. Combining bank accounts is a great way to practice this.
Learn from Each Other
Don’t think of yourself as the be-all and end-all of financial knowledge. There is a chance that your spouse knows more or is more experienced and disciplined when it comes to handling money. Even more likely, there will be some things you know more about and some things your spouse knows more about.
For example, I know more about making everyday purchases than my husband does, such as extreme couponing. On the other hand, my husband knows more about investing, so we are able to learn these things from each other.
Marriage and money can be tricky, but the best thing you can do is be open and honest. Start off on the right foot by talking about money management and coming up with a solid plan to deal with budgeting, spending, and investing. The sooner you do this, the better. If you form good money management habits as a newly married couple, you’ll be able to work as a team through whatever life throws at you for many years to come.
How do you and your spouse manage money? What are some of the things that have worked best in your situation?