Sometimes looking at what smart couples are doing to create "great" situations helps to turn the tides on a "bad" financial situation. Experts Denise Wade and Anne Alexander Vincent weighed in on this topic and offer the following quick tips as a menu. Even one or two of them done consistently will help to bring your money situation from the red into the black (or the green!)
- Push through the dreaded "money conversation"When entering a relationship, we usually bring a financial blueprint from our family of origin. Smart couples candidly identify destructive beliefs around money that trigger limiting behaviors such as overspending, excessive frugality, scarcity, or unreasonable demands. By consciously recognizing and eliminating unhealthy patterns, assumptions, and impractial habits based upon parental influence, social programming, and socio-economic upbringing, they co-create new beliefs around money that will serve their household budget, lifestyle, and potential goals better.
Values drive priorities; priorities drive choices. The majority of economic conflict stems from different perceptions of necessities versus luxuries. Ask your partner to define necessities, and then define luxuries. My research with 1000 couples indicated that 77 percent of fiscal squabbles originate from disagreements over exactly what items in the budget constitute expenses and what constitute extras. For many savoir-faire couples, the key is mutually aligning the priorities by defining necessities and jointly negotiating the luxuries.
Many of us, at some point, may experience financial struggles through no fault of our own, such as job loss, stock market decline, or an unforeseen illness. Couples that consciously strategize and agree to live within their means give themselves financial breathing room should they experience unfortunate circumstances.
A good rule of thumb, especially early for younger couples, is to allocate 10 percent church/charities and 10 percent to savings, with 80 percent to live on. If you can, put away 50 to100 month for one year, then raise that amount to get into consistent savings for retirement or any financial surprises that may arise.
Devise a mutually agreed-upon budget and then meet together quarterly to review it. Create a plan to start an educational fund for children as soon as possible and get rid of credit card debt as soon as possible. It's also wise to have a definite plan for checking accounts. Will you maintain separate accounts, have one joint account, or perhaps each contribute to a household account?
When creating your budget, create a detailed list of all of your joint expenses, personal expenses (non-household) and your savings plan. Detail out the expenses in the order of priority and check to see where you're in agreement and where you need to negotiate—remember that it's OK to not agree on everything in principal, but it's important to agree to the bottom line for how money is spent.
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I encourage plastic surgery: cut up those credit cards that arrive in the mail. Keep one with a low interest rate for emergencies. Try to limit your debt and pay for things you can afford. Credit needs to be looked at as a tool to use when needed and then paid back, as opposed to a savings account to debit from whenever the whim hits.
Each person should have a designated amount of "mad money" per month to spend as he or she wishes. Allow the other to have one or two items you may not understand. As long as your budget stays healthy, this is a win-win move! For example, the couple might alternate personal maintenance when money is tight, a massage for him one month, a pedicure for her the next.
When talking about your budget, try to maintain a calm, even tone of voice. Try to be understanding and nonjudgemental. Shaming your partner into following your financial plan never works. Remember control always invites resistance! Talking early in the relationship about the “money messages” you received from your parents is critical so you have an understanding of where your partner's financial message came from. But remember, this information shouldn't be used to shame your partner if they err on their agreements.
Becoming aware of your spending patterns, especially under stress, is key. No one is perfect and we all have money messages that can be improved. Come clean with your partner and realize that none of us is perfect. And remember to be forgiving in return when your partner shares his/her flaws with you.
Becoming a financially healthy couple is a goal that every couple should work on. Having a comfortable dialogue between you and your partner around money is critical to eliminating the emotional volcano that can occur when problems are left unattended. Our final piece of advice: print out this article and share it with your partner. Talk over the issues presented here and get on the same page about your finances so you can get back to the more important things in life, like your relationship.
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