by Malini Bhatia
www.marriage.com
Money problems in marriage are as common as the cold. But just like the cold, marital finances can cause headaches, too. That is, if you aren’t managing things as well as you should. We’ve all been there. Married life can be complicated. Get two different people together, and you’re bound to have differing backgrounds, opinions, and methods of dealing with money.
So if you have had money problems in your marriage, it’s time for a meeting of the minds. If you two have avoided the topic of money, those days are now gone. The number one thing married couples must do in order to better manage their money is to communicate effectively.
Start at the beginning. If there have been mistakes or hurt feelings with regards to money in the past, start with a clean slate. “From this day forward, we are a team and we are both in charge of our money together,” or something similar should start your first discussion as you begin this new chapter of your financial life as a married couple.
Here are some ways you can both work on managing money in your marriage so money is no longer a problem, but a solution.
Discuss Long-Term Goals
What do you want to do with your money? What sorts of vacations do you want to go on? What car would you like to drive? What kind of house do you want? Will you pay for your kids’ college educations? How much money do you want when you retire? Discussing these goals will determine what you should save for and which types of investments you should seek. The important part is to get on the same page.
Get the Vital Numbers
How much debt do you have? List them separately, then add them up for a total. How much savings do you have? List them separately, then add them up for a total. What assets do you have, such as your house, car, etc.? How much could you sell them for today? What is the balance on each of your retirement accounts? This will paint a clean picture of where you are right now.
Dig Into the Previous Months for a Spending ‘Reality Check’
This might be a painful process, but you will be amazed at how much light it sheds onto what your spending habits are like. It’s a true reality check for both of you. As you pull up the numbers on your bank statements, perhaps you will find that spent more eating out than you realized, or you will figure out that your company didn’t reimburse you for an expense two months ago.
The important part is to compile averages over several months. You can find programs online that can help you with this, or an Excel spreadsheet or even just a pen and paper will do. Then, you should figure out an average of how much you spend on groceries, eating out, gas, car repairs, etc. each month so you will know if you want any of that to change.
Calmly Discuss the Positives and Negatives
Without issuing blame or showing regret for the past, calmly discuss the positives and negatives of your finances. Then ask your spouse for input. One example could be, “We spend X on eating out every month, and I think that is too much. Ideally I’d love it if we could spend Y. What do you think?”
After you finalize your discussion, come up with an action plan. “We have both decided to spend Z on eating out every month, which means we will spend one fourth of that every week.” (Pulling out that amount in cash make it easier to keep within the agreed amount.) Repeat this for each item that needs some work. As you go along, be sure to also point out positives, so you can repeat those in the future. “We added X to our savings in August, which really helped us pay for that car repair in September!”
Get Your Monthly Budget Ironed Out
Write this down:
*Incoming Salary (all forms)
*Outgoing (amount is pretty set each month) monthly bills such as utilities, natural gas, subscriptions, memberships, phone, Internet, cable, etc. Be sure to include dates these are due each month. If the date is variable, check the last few months and pick the date that is earliest in the month (for example, if it ranges between the 15th and the 17th, pick the 15th as the monthly due date so you’re never late paying it).
*Outgoing (variable month to month) gas, groceries, car repairs, haircuts, clothing, birthday gifts, and other things that can vary from month to month. When you dive into previous months, you can figure out an average for these. If something varies widely, such as the water bill being high in summer and low in winter, account for that or see if your utility company does an average payment option to keep the payment more steady.
Now you have a written budget! Add your debts and income to that sheet as well. Both of you should have an updated copy at all times to avoid future discrepancies or overspending. Emailing each other a copy is a good idea and makes it easy to find.
Have a “Money Meeting” Every Payday
Until you are both on the same page about money and things are sailing fairly smoothly, you’ll need to sit down every payday for a meeting. It’s not really fun to do a budget, so maybe call it something funny or always have awesome snacks, or turn on some music to keep it more fun. The more positive you both can be, the better.
Basically, what you do at this meeting is go over how much money has come in, discuss the upcoming bills (especially those until next payday, but don’t forget those bigger monthly ones you need to save for, such as next month’s mortgage), and talk about what other things might be coming up, like your son’s birthday party that you’ll need extra money for.
Sign Up for Auto-Pay When Possible
If you don’t have to think about it too much, or if it’s happening in the background, then the decision is made and it’s done and over with. Couldn’t be easier. Especially for those vital expenses such as life insurance, retirement contributions, and city utilities, if it happens at the same time every month, then it’s much easier to plan for and you won’t miss payments.
Make Assignments for Who Pays What
Some things can’t be put on auto pay, and that is fine. You just need to figure out who will pay that bill, and how they will pay it.
Above all, make sure you both communicate effectively and often about money. The more you can work together on it, the fewer problems will pop up.