When you’re part of a family, your financial decisions don’t just impact you – they affect your partner and any children you have. As such, you’ll need to manage your family finances as a unit and make decisions that are in everyone’s interests. Here’s how.
The first step in achieving financial harmony is setting goals. Sit down with your partner and determine what you want to accomplish together, like buying a house or saving for retirement. Then, talk through individual goals, such as starting a business or enjoying your hobbies. Knowing where you stand together and separately will help you coordinate your finances.
Once you know your goals, you can create a budget. Start by assessing your current household expenses, including recurrent bills and “fun money” purchases. Compare your expenses to your income to determine if you’re spending more than you can afford.
Then, make changes as necessary. These may range from simply spending less on takeout to moving to cheaper housing.
A crucial part of budgeting is setting aside money for your goals. Aside from saving for a house, car, or your wedding, discuss how to save for:
· Educational expenses for yourselves or your child(ren)
· Vacations or luxury purchases
Determine how much you need for each goal (and by when) and make allowances for saving in your budget.
Every family manages money differently. Some couples combine all their money, while others maintain separate accounts to keep some independence. Another option is to keep separate accounts and pool shared expenses into a joint account. Ultimately, you should personalize your arrangement to fit your needs.
If you have separate accounts, you may need to discuss splitting the bills. You may:
· Split bills 50/50
· Divide expenses based on a percentage of each partner’s income
· Put each person in charge of specific bills
There’s no right or wrong way to divide your bills, as long as each partner feels the arrangement is equitable.
Even if you combine finances, each spouse should try to build a solid credit score. Your credit can determine where you live, how much you’ll pay to borrow money, and even where you can work. Even if one partner is paying for more bills, it’s usually a good idea to have both partners on the credit card, as long as you make payments on time.
Keeping your family as debt-free as possible ensures that you can save and spend your hard-earned money. As such, it’s important to avoid debt whenever possible and only borrow what you can afford. If you do have to take out debt (such as to buy a house or car), be sure to make sure you can afford the monthly payments first!
When you commingle lives as a family, your decisions impact your partner and any children involved. To avoid stressing about money, communicate and stay united in your goals, savings, and spending habits.
However, that doesn’t mean you can’t have individual dreams or goals – just that you need to factor in your family. Many couples find it helpful to hold monthly meetings to assess income, expenses, savings, and other financial matters. Afterwards, you can celebrate being on the same page and having a plan!