The New Year is upon us, and plenty of people are making resolutions to lose weight, save money, and strengthen their relationships. But too often, resolutions fade after a few weeks due to lack of planning and discipline.
Whether you’re in a new relationship or you’ve been married for many years, a new year is a perfect opportunity to sit down and discuss your finances with your significant other. Maybe you’re saving for a wedding or vacation, trying to reduce student loan debt, or simply need to create a basic budget.
Finances are important in any relationship. In fact, studies show that money problems are one of the leading factors in divorce. So, this is certainly a topic to prioritize in your relationship.
Below we’ve shared 10 tips for a couple’s financial planning. Following these steps will help you remain disciplined and set you up for success in the new year, so you can finally stick to the resolutions that matter most: your relationship, and your money!
Tip #1: Start a Budget
This one is rather obvious but too important to ignore. If there’s one thing you take away from this blog post, it should be this: creating a budget is key.
What is a budget? In short, a budget is a summary of everything you earn (like salaries, wages, tips, freelance income) and everything you spend (like rent, mortgage payments, food, gas, and insurance.) Many couples create yearly, monthly, or even weekly budgets.
The purpose of a budget is to (ideally!) ensure that you spend less than you earn, so you can save and plan for your future goals and needs.
When creating a budget together, it’s important to “come clean.” If you’re bringing existing debt (like student loans or credit card debt) then you must share this with your partner. After all, you can’t tackle it together if you hide key information.
This is also the time to be honest with one another about income. Who makes more money does not matter. What matters is that you’re a team – what’s yours is theirs, and vice versa.
Tip #2: “Schedule” Ongoing Budget Reviews
Okay, okay, we realize this sounds like another meeting at work. We promise, this can and should be fun!
On a quarterly or monthly basis, re-visit that budget you built together. Write the date on the calendar and plan something fun around it, like pizza and beers.
During these budget reviews, talk about your “wins” for the month – like how you spent $50 less on groceries than planned – and your “losses” – like how you just couldn’t resist the new headphones. And don’t judge one another: the goal is to talk about how you can do better next month, and whether you need to adjust the numbers in your budget to be more realistic.
If your expenses came in low, consider shoveling that extra cash to an emergency fund (see below for more on this.) And if you spent more than planned, don’t fret: commit to doing better next month, together.
Tip #3: Talk About Goals
After you’ve developed a budget, talk about goals. Goals are an important part of any couple’s financial planning. This doesn’t need to be a formal discussion, and you’re probably familiar with many of each other’s goals anyway.
Talk about individual goals first.
What’s on your bucket list? Do you want to spend a week in Tahiti, or travel in Europe for a year? Do you hope to take a sabbatical from work to write a novel?
Next, talk about your joint goals – things you want to achieve as a couple.
Do you want kids, and plan to start college funds when they’re born? Do you want to retire early to travel? Do you plan to buy a home and, if so, how much space do you need?
Once you’ve established your financial and life goals (both individual and as a couple!) then write down timelines, and start building saving plans to work toward each one. Consider adding line items in your budget to steadily save for each goal.
Tip #4: Consider Separate Spending Accounts
When talking about a couple’s financial planning, many couples decide that they’d like separate spending accounts. Generally, these accounts are for small purchases (you set the threshold, but $100 is common.)
There are a few ways to structure this, but one way is similar to an allowance: each person gets a set amount of the monthly budget, and they get to spend it however they choose! New shoes, new books, endless milkshakes.
The key? It’s a judgment-free zone. No more disagreements about all those lipsticks she has piling up, or the fact that he eats burritos for lunch every single day.
Tip #5: Seek Professional Input on Effective Couple’s Financial Planning
Let’s face it, you don’t know everything. Sometimes, a professional can offer great advice and input for a couple’s financial planning.
This may include a tax professional (CPA) who can help you maximize deductions and minimize your tax bill; or a financial planner to help you understand your ideal retirement age; or an investment advisor who can help you choose the right blend of stocks and bonds.
Whatever the case, don’t forget to bring a list of questions to ask the advisor!
Tip #6: Invest Wisely
A couple’s financial planning should include a short discussion on investing: is it right for us? Does our budget have the room? What are our investing goals?
One of the most common ways to invest in the stock market (and grow funds at a steady rate over the long run) is to invest in mutual funds or index funds. These are relatively low- to moderate-risk.
Other forms of investment include things like real estate, bonds (corporate or municipal) and even high-risk, more volatile products like cryptocurrency.
Whichever investment products you select together, ensure that you can withstand short-term losses and that you understand tax impacts of any gains.
Tip #7: Establish an Emergency Fund
Listen up, folks. Nothing strains a relationship more than unforeseen financial setbacks, like a broken air conditioner or a blown tire.
Don’t let these minor inconveniences come between you. Ensure you’ve established a comfortable emergency fund. You can start small, let’s say $500, but work to save 3-6 months of expenses, just in case one of you loses your job or falls ill.
Tip #8: Don’t Leave Money on the Table
If either of you have 401ks through an employer, read the fine print closely! Does your employer offer a “401k match“? This means that for every dollar you contribute, often up to 3-6%, your employer will also give you a dollar.
This match can equate to tens of thousands of dollars over the long run, so you don’t want to miss out on this. If you’re not contributing to a 401k and your employer offers a match, you’re missing out.
Never, ever leave money on the table. Besides, saving for retirement early is always a good idea due to compounding interest!
Tip #9: Help Each Other Remain Realistic
Here’s where you and your partner can really support one another as you pursue your couple’s financial planning. The two of you can keep each other realistic and level-headed.
Let’s say that one of you comes home on a Monday night with bad news: you didn’t get the promotion you wanted, and your car insurance bill came in higher than planned. A good partner will support you emotionally and remind you that this is why you have an emergency fund!
Likewise, if you’re trying to save for a vacation and you’re feeling optimistic that you can spend $10/day on food, hopefully, your partner can help you understand that this just isn’t feasible (unless you love ramen noodles…)
In short: encouraging one another (and keeping things real!) is an important part of a couple’s financial planning.
Tip #10: Keep it Fun
Budgets and 401ks and compounding interest…”blah, blah, blah,” you might be thinking. Let’s back up for a second.
The most important part of all of this? Having FUN!
After all, the reason you adore each other is that you have a blast together, right? A couple’s financial planning should be no different!
In addition to “budget date nights,” establish cheap nights at home with pizza and a DVD (and save that extra cash for a beach trip!) Consider awarding yourselves with small prizes as you pay down debt or hit savings goals. You’ve worked hard, and you deserve to celebrate your accomplishments together.
A couple’s financial planning doesn’t need to be stressful or complicated. This is about forming a partnership to team up on things like debt or unexpected expenses, and it’s about achieving big things with your loved one by your side.
No matter your age, marital status, or future goals, you can always work together to pay off debt and save more money. We have a number of money-saving ideas that can help you reach your financial goals sooner, and make your relationship stronger.
Check out our other helpful tips today, and here’s to having your best year yet!