The following is a guest post from Andy who blogs at www.pennylessdad.com
How Can Couples Merge Finances Without
Blowing Their Love And Their Sanity?
Love may be blind, but finance is not!
I have seen the most loving couples part their ways due to problems related to finance, respect and trust! Money is such a mysterious object. For some it works wonders, while for some it can come down as a curse!
Today we shall try to understand how can couples merge finances without blowing love and mind?
Love and trust are the two most important components of a stable relationship: Don’t expect to see your relationship standing rigid and solid, if you and your spouse can’t trust or love each other.
Be it any matter you have to deal with, always tell yourself that:
“Whatever this is, it is not going to hamper your love and trust for your better half.”
Remember: The promise a bride and groom make on their wedding day? It’s the promise to be together, even when this World falls!
So if you and your partner plan to merge finances together from now on, then make sure, that both of you don’t hide things from one another! Also never embellish facts and truths! A slight example of this could be, you are earning $3,000 each month, and you tell your partner that you bring in some $4K only to maintain your self confidence or dignity! Just imagine what will be the situation if your partner asks you to contribute $3500 one day, due to some financial crisis! Both of you will fall from the sky!
So whenever you plan to combine finances, try to be transparent. Both of you to be exact!
Dedication, love and trust should come from both the sides!
Never hesitate to have a discussion about your money and other financial matters with your spouse. Only stress free money talks between each other can help couples merge their finances together!
Both the incomes must get equal respect irrespective of the amount:
Many couples fail at this part. If you don’t have respect for your partner’s income, then you can never think of merging his/her salary with yours.
So sit down with your spouse, and figure out the total income both of you bring home!
It doesn’t matter who earns what! The most important part is that both of you are earning!
So look at the silver lining, look at the grand total you make together!
Set up savings goals:
The best motivation for a couple in bringing their finances together is setting up good savings goals.
This is the most energetic and fun part.
Remember the more you save, the more you have!
So plan with your spouse, how much you want to save for your future.
You know, when a couple plans something big for their future, then chances of breaking up and separation in their relationship also decreases!
Hence fix a savings amount for each month!
For example, if the total income of you two is more than $5000, each month, then with a little effort you can easily save $200 or more in one month!
If both of you are smart, then you can plan to do long term investments, like buying a second house, or mutual funds and stocks!
Or you can also plan for your kid’s educational costs, if you have any!
Like you can go for a 529 plan, or a Coverdell savings account! Where both of you can contribute amounts as per your capability!
Together you can do a lot of things!
Having two breadwinners is no joke! So make optimum use of the fact that both of you are earning members!
Proper financial planning for a couple should include good saving goals and effective money saving strategies!
You can also plan your retirement together, if both of you truly believe, you can’t live without each other!
Having joint accounts are always a good method to pull your finances together, but I have seen cases where divorce and other conflicts have made it hard to manage joint accounts in the future!
So go through your options, and have a thorough understanding of your situation, before you plan to have a joint account with your spouse!
Now the budget, and equal divisions of expenses:
What type of budget should you follow to tackle the expenses together?
The best two budgeting strategies that are coming to my head are the envelope budgeting and zero based budgeting!
I won’t be talking about savings here, as I have just discussed that in the section above!
So whatever budgeting technique you are about to choose, first set aside your desired savings amount, and then focus on your expenses!
First: the Envelope Budgeting:
In this type of budgeting you make separate envelopes for each of your expenses.
Like, one for utility bills, one for mortgage, one for auto loan, one for gas costs, one for groceries, one amount allocated for bar, clubs, restaurants, so and so!
Now if you have children to take care of, then add those costs too!
Here you need to divide your expenses between you two. If both of your incomes are equal (which is an ideal condition), then the contribution should be 50-50 for each of the expenses!
But if the incomes are different, then let the bigger expenses be the responsibility of the one with the greater income!
Bigger expenses usually include the loan payments, insurance premiums and anything as such!
So if you are the one with the higher income, then it’s your job to fill up the envelopes for the bigger expenses, while your partner can take care of the utility bills, and other day to day expenses, such as groceries, gas costs and etc!
Second: the Zero-Based Budgeting:
This is my top most preference.
Here you just list your expenses one by one, as per their order of importance.
What’s the first thing that you can’t live without? It’s food!
So grocery and food costs should be at the top. Then the mortgage payments, next your other loans, then the utility bills, and go on accordingly!
Don’t forget to give priority to your child’s school fees, or day care costs, etc!
The motto of this budgeting is to forcefully drive every single dollar of yours to some use!
So once you have listed your expenses, it’s time to mark who will take care of what expenses! This is something that only both of you can figure out!
After you have completed listing your expenses, if you see that you have sparred dollars, then punch it to savings, or have party with it!
It’s up to you!
Then what about debts?
Fight it together, if you have them around you!
Stand back to back, and start killing them one by one. You should not worry, you have two incomes to help you with!
Also debts are not bad. You might not even know, what hidden talents you have, before you start to clear your debts.
To be precise, I would always recommend to go for a bit of financial counselling before you plan to take over your debts!
Life is very short, try to believe in love, respect and trust!
In this world, nothing else matters!
You can only be successful if you can love, and in return you are loved!
Never ever look beyond the costliest object in this word! It is love, and the warmth in touching your love!