Money can cause a very emotional reaction in most people, so knowing how to manage money and marriage is essential.
Not knowing how to deal with money and financial hardships can ruin relationships and your marriage. However, a lot of people still treat talking about money as taboo. Even with their loved ones!
In this article, we’ll talk about why communication about finances in a marriage is essential and how you can also learn to achieve your financial goals together.
Communication Is Key
Did you know that 50% of married couples get divorced because of financial problems?
You have to talk with your spouse about finances at some point in your life if you want to have a solid marriage and avoid misunderstandings.
And it’s always better to have those money conversations with your partner before you actually get married to make sure you’re on the same page.
But things happen, and sometimes it takes years for people to sit down and have an honest and open dialogue about money, finances, and future financial plans. As long as you’re willing to communicate, it’s all good.
If you’re facing any financial problems right now, know that they won’t go away by themselves. You need to have that talk and work together as a team to tackle them.
It’s never too late to talk about money matters, find common ground, and start fresh!
Also, all of this advice works for non-married couples. It’s just that financial implications and taxes are different in marriage.
If we hadn’t discussed our finances a few years ago, we would still have a six-figure credit card debt!
Here are some of the things that’ll come up in that money conversation and during your financial journey.
Your Money Mindset Matters
If you want to reach financial freedom, you need one thing – a good money mindset.
But when it comes to marriage and money and trying to become financially free together, there’s a possibility that your mindsets aren’t going to match.
So ask yourself and your partner: How do you feel about money?
Money often makes people emotional, but you have to remember that you’re the one who’s in control of it.
How we view and feel about money often comes from our family and surroundings. Sometimes our mindset is good for us, and sometimes it’s terrible. It’s up to us to figure it out.
You or your partner might be scared of money or having this conversation in general, but you must work together at the end of the day. Understand what makes you uncomfortable and talk to each other.
Ensure you’re on the same page, or at least find a way to bridge the gap.
Switching your mindset isn’t something you can do overnight. It could take years. But if you’re doing it together and being deliberate, you can look back on yourself in a couple of years and realize how far you’ve come.
What Lifestyle Do You Want to Live?
Having concrete goals and a clear financial picture you can visualize is a must no matter what you’re doing, and that’s especially true when managing finances in marriage.
Think about the lifestyle you want to lead. What makes you happy? Do you want to travel around the world? Eat out at fancy restaurants more often? Just plain old financial security?
When you imagine the best life for you, what does it look like? And does it match what your partner had in mind?
Once you figure out what you want your future to look like, you can move on to the next step.
Figure Out Your Common Financial Goals
It’s not just about visualizing. It’s also about some detailed financial planning.
Will you live your best life if you pay off your credit card debt or mortgage? Or save enough money for retirement?
Set up a concrete goal for both of you. Like, for example, buying a house.
Now that you know what you’re aiming for together, you can make a detailed plan and hold each other accountable. And every time you’re thinking about making a big purchase, you can ask yourself, “Will this help us reach our goal?”
When you figure out your shared goals, you can work together to accomplish them.
Analyze Your Situation and Your Finances
Once you set your goals and figure out what you want to accomplish, it is time to plan. And before you get to financial planning, you must analyze your financial situation first.
What is your income, and what do you spend money on jointly and separately? Which one of those expenses puts you further and further away from your goal or worsens your financial situation?
Once you decide what expenses you can eliminate and what you can save on, it’s time to make a spending plan. Think about creating a household budget with your spouse or a monthly budget.
Figure out how much you’ll need for that goal you have, and start saving money for it.
For us, it turned out that we didn’t have to make as much money as we initially thought. We just needed to implement better money management on our current income. Because we had money, we just didn’t know how to manage it successfully.
If you’re married and want to reach your shared goals, you have to be honest with each other.
You can’t hide income, whether you have debt or your credit card balances and credit scores. Of course, having your own money in a relationship is completely normal, but you can’t hide your expenses once you’ve already set up a plan that both of you were meant to follow.
Everything can be sorted out by just talking about money and having a clear understanding of where you are and where you want to go.
Remember that you’re on the same team!
Know Your Boundaries
The one thing you should know when saving money, budgeting, and managing finances generally is to always know your boundaries.
It’s time to be realistic. Can you spend an extra $100 on eating out this month? Or is that instant gratification something that will help your financial happily ever after?
That’s a trick question. The answer is no, it won’t.
Setting up a financial plan means that you have to be realistic, honest, and disciplined. And managing money and marriage also means knowing when to say no.
When you get married, you agree to a partnership, and that means working through problems together.
Whether it’s communication, mindset, or analyzing your finances, this is the time for the two of you to put your minds toward a common goal.
Create a household budget, keep discussing money, and start putting money aside for all of your big plans. Create an emergency fund, start retirement and savings accounts, and buy joint assets.
When we started working together on our finances, we realized how much easier it was. You help each other, hold each other accountable, and move together. You get excited about the idea of working together and seeing financial milestones.
It’s easy to say, “Hey, you just need to work together!” But we have a couple more things to point out.
When dealing with money and marriage, you have to stop blaming. Stop blaming yourself, stop blaming your partner, and find a way to communicate.
Many people are scared of money, and if you attack them for bad financial decisions, you won’t get a good and productive result. Just hold each other genuinely accountable, hold yourself accountable, and make room for improvement.
If you have problems, figure out what they are, analyze them, and find a way to solve them together.
One thing we accepted at the beginning of our journey is that we don’t know everything.
There are many people out there with way more knowledge of finances than us, and their resources are available in books, videos, or blogs.
If you find a book about personal finance you want to read, read it with your spouse. Make sure that you’re both educated on these topics and that you’re on the same page.
You can only reach your goals together if you learn and grow together.
Having Different Salaries
Generally speaking, if you’re a married couple, it’s likely that one partner has a higher salary. That’s just the way it is. But there’s no need to make earning power into something too big.
You’re still contributing even when one of you is contributing less monetarily.
An honest and open conversation where you find a way to use your money to reach common goals is a must, no matter how much you make.
Get a Financial Advisor
If you have trouble managing your finances, it might be time to get help, even between the two of you.
Getting a financial advisor or a financial planner that can help you analyze your spending and create plans for your future can be extremely helpful.
Should You Combine Finances?
Many married couples ask themselves whether they should have a joint bank account or separate bank accounts for each person.
Truthfully, it depends. The best option might be to have both joint finances and individual checking accounts.
One joint account for joint ventures, investment products, and financial goals that you can both contribute to and separate accounts for your spending.
Combining finances is for you to decide. As long as you have a healthy money mindset and financial trust, there should be no problems with sharing finances.
There are a couple of pros and cons to having just one account. Here’s what you should know if you want to combine finances.
- Combining finances can build mutual financial trust.
- It makes it easier to create a household budget and reach common goals.
- You feel like you’re a team and have to work together.
- You don’t have complete independence and freedom over your finances like you do with individual accounts.
- One spouse could have more significant debt than the other, creating an imbalance.
- You might feel guilty for spending more money on yourself.
How We Did It
At the beginning of this article, we mentioned our six-figure credit card debt. That exact amount was $120,000.
The key word? Was. Thanks to our financial plan, we got rid of that debt a couple of years ago.
Say hello to Lifestyle Banking.
When we started to learn about money and how cash flow works, we realized that we control money; it doesn’t control us.
And it’s always supposed to be in motion if you want it to grow. That’s where Lifestyle Banking comes into play.
Lifestyle Banking uses an overfunded life insurance policy to create a financial system you can use to live the life you want to live.
A loan? But that’s just more debt? No. You owe this money only to yourself. So the only thing you need to do is pay yourself back.
You set up your interest rate and your repayment schedule. Ultimately, you don’t pay the interest or fees that you would pay for a traditional loan from a bank.
The best part? Whole life insurance guarantees growth, so the money in your account keeps growing.
We’ve been using this system for a couple of years, and it’s helped us pay off debt, invest, and live the lifestyle we want to live.