According to the Huffington Post, finances are one of the top ten reasons for divorce in the United States. Often couples rarely discuss finances before they get married, and struggle to combine them or share a life together with separate incomes. If you’re contemplating marriage, or even if you’re already married and face financial issues, make sure you have a plan for a future budget. The key to a successful financial life together is different for everyone, but these tips should help to make the process easier on you both.
Discuss Finances Honestly
Sit down and list all your debt together and leave nothing out. Talk about how you want to handle money and what financial goals you each have. Do you want to retire at a certain age? Own a vacation home? Send children to college with no need for student loans? Look realistically at your income and expenses to see how you can achieve those goals, developing a budget together that will lead you in the right direction. If you or your spouse want a prenuptial agreement done, it’s best to talk honestly through what your goals are with an experienced Silver Law Group attorney or qualified financial advisor. This way you can stay on the same page an have a financial plan for the future together.
The natural instinct once you are married is to combine all income and expenses using one joint bank account. For some couples, this works well and may actually increase trust in a marriage. However, this process does not work for everyone. In any marriage, each person should be given some level of autonomy over income, and there is nothing wrong with each spouse having a separate bank account. It is even possible to combine both a joint account and separate accounts. This is especially important if you need to build credit separately from a spouse. If you choose to only use joint accounts, set a limit on what each partner can spend without discussing it with their spouse, such as anything over $500 must be agreed upon by both, but anything under that amount is fair game.
It is not enough to just create a budget, you also have to track how well you are sticking to it. Dave Ramsey, a financial expert who counsels couples on how to live debt free, suggest using what he calls The Envelope System. This system allows you to stick to the amounts you have budgeted by dividing up money and putting the allotted amount in an envelope: one for gas, groceries, and entertainment. By using this system, you force yourself to live within your budget. You should have your budget written down, whether on paper or in your computer. Enter all your combined expenses to see you are sticking to it each month. If you come in under budget, move the extra cash into the savings account you are using to achieve your long-term goals.
These are just a few simple tips that can help keep your marriage on track when you deal with finances. Because money is one of the most common causes for divorce in the United States, learning how to handle finances with your spouse early on is an excellent way to avoid becoming one of those statistics.