Household spending and budgeting is one of those responsibilities that’s best tackled together. Money issues are one of the biggest sources of marital tension, and a leading factor in divorces. Here are five ways that you and your spouse can make sure you agree on your household spending, avoid surprises, and maximise the Return on Life ™ your money provides.
- Have an open and honest discussion.
Many couples assume their attitudes about money are aligned. Then one day, the roof needs an emergency repair that eats into a savings account, or someone walks in the door with an unexpected splurge purchase (or worse yet, hides it!).
Stressful situations are not the ideal time for a couple to discover significant differences in spending habits. Sit down with your spouse and have a thorough review of your finances, and your monthly budget. Find compromises that will allow you to save for the future while still enjoying your present.
- Understand the total household cash flow.
In many households, one spouse handles all the bill payments. This can lead to misunderstandings, and arguments, about where the money goes every month.
Both spouses should understand how much the household spends every month, and how your bills get paid. If you’re the one who’s usually in charge of bills, take an hour to walk your spouse through your process. Show him or her which bills are paid electronically, which are paid by direct debit, the monthly amounts and due dates, etc. This won’t just help both spouses understand the monthly cash flow, it will ensure that both spouses can handle household finances in the event of an emergency.
- Be transparent about all assets and liabilities.
Newly married couples might still have banking or credit accounts that are only in the original account holder’s name. The other spouse might not find out about these accounts until a credit card is maxed out, or a current account is overdrawn.
Again, the less stressful your reason for talking to your spouse, the more positive the outcome will be. Financial secrets tend to come out at the worst times, compounding stress, hurt feelings, and strain on your budget.
Your spouse should be a co-signer and beneficiary on all of your accounts, and vice-versa. If one of those accounts carries a large liability, get out in front of the problem and talk about how to start paying it down. Discuss the ramifications of combining any large individual assets with a tax professional or your financial adviser.
- Agree on a budget.
If one spouse is responsible for budgeting and paying bills, that person often becomes The One Who Has to Say “No.” No eating out this week. No weekend trip to the waterpark. No new mobile phones. No new clothes.
Nobody likes being in that position, especially if you’re saying “No” to your children. Eventually, you or your spouse will resent being The One Who Has to Say “No.” You should both understand the household’s monthly cash flow and agree on how your money is – and isn’t – spent.
- Get help
Automating bill payments and regular contributions to retirement and savings accounts can also help to clarify your monthly budgeting picture.
Finally, if there’s a spending gap between you and your spouse that seems impossible to bridge, we can be an excellent resource. It’s important to us that we understand where clients’ attitudes about money come from, how they’ve developed, and how they can diverge between couples. Facilitating this dialogue is key to making sure both people have the best life possible with the money they have…and we can help do that for you.