Financial Planning for Couples- How to Manage Money Together

Financial planning is a continuous process that needs lots of experience and knowledge. You should have thorough knowledge of your financial requirements and current financial situation. It is necessary to think seriously about budgeting and investment tactics. Managing your finances is essential because it enables you to efficiently plan for both your long-term and short-term life objectives.

Read: How to Start Investing With a Small Amount of Money?

Financial Planning for Couples

It becomes very challenging when two individuals manage their finances together but their views are different on common ground. Many couples find it difficult to agree with each other when collaborating on financial choices. Therefore, whether you are newly married or a years-old married couple, you should have defined financial objectives that contribute to making your future secure. A good strategy includes good planning with consistent experience which makes financial planning beneficial and helps you maintain both marital and financial balance.

Key Factors Couples Should Consider Before Beginning Financial Planning

When both partners in a couple are earning members, in the initial stage of married life, the couple feels some problems while planning the finances of their home. But gradually, with the passing of time, trial and error help them to manage finances to find out what suits them best. There are a few factors which should be considered before starting financial planning:

• Couples can handle their finances using individual accounts, a joint account, or a mix of both. It means they handle their finances in any of three methods: separately, jointly or a blend of both. Every method has its advantages and disadvantages. But it all depends upon you which method you like to adopt, as everyone has his own lifestyle, own limitations, own spending habits, and own priorities.

• Using your own accounts separately can prevent disputes, but it requires additional planning and due to separate accounts, you might miss out on some of the advantages of combined finances. In this method, you both should have mutual consent about taking responsibility of particular bills. It may bring clashes of ideas.

• A shared account makes it easy to make a budget, but it may cause some problems if partners have different types of lifestyles. If one of the partners is extravagant, it becomes difficult to manage finances.

• Having a joint account that has funds from both partners and can be checked by both partners. It allows better expense tracking and reduces financial disagreements.

• It is essential to discuss how you both would like to handle bank accounts, everyday expenses, budgeting, and additional financial matters. Although these discussions may be difficult to reach any conclusion immediately, you should not hurry to create a financial plan promptly. It is a time taking process, specially for newly married couples.

• Transparency regarding finances is crucial for building trust in a marriage. None of you should hide anything regarding your finances or expenses.

Tips To Manage Money Together

Here are a few suggestions for handling finances as a couple:

• Make a frank and mutual financial discussion: Regular discussion about your financial objectives, earnings, expenditures, and problems. Discuss your personal financial habits, beliefs, and perspectives on saving and expenditure.

• Trust and transparency: These are the two fundamental pillars of a successful married life. You should discuss about your financial objectives, earnings, spending, loans, investments, and any problems regarding your finances. Transparent discussion of your financial situations and difficulties brings clarity and avoids any type of misunderstandings.

 • Develop a consolidated budget: A combined budget helps in allocating funds based on your priorities and financial objectives. You can apply the 50-30-20 rule for managing finances, which suggests that 50% of your earnings should be allocated for necessities, 30% for desires, and 20% for savings and investments.

• Different financial planning strategies: As a couple, either you can opt to merge your finances or you can maintain them separately. Separate maintenance of funds gives greater financial independence. There is one more option that you can combine a certain part of your finances and keep the remaining amount separately.

• Open discussion about choosing the financial planning strategy: It is advisable to talk about the method you like to use as per your choice. In this manner, you can create a good and helpful strategy to handle your finances collaboratively.

• Establish combined financial objectives: You should decide your short-term and long-term objectives simultaneously. Your joint effort will be helpful to fulfil your shared goals easily. Some of these goals are constructing your own house, purchasing a car, ensuring your children’s future, organizing your retirement, and so on.

• Create a reserve for emergencies: Try to keep aside some funds regularly in an easily accessible account. No one knows when you may require a heavy amount for any emergency. Any unforeseen incident as a medical emergency, accident, or any type of unexpected cost can seriously impact your budget. Allocating money specifically.

• Monitor spending behaviours: It is common to use online shopping methods, which sometimes makes impulsive purchasing. If you find your finances are not under control, it becomes necessary for you to monitor your spending behaviour collectively or you can make Excel spreadsheets to identify areas where you might be spending too much and then you can bring changes in yourself accordingly. • Use your money judiciously: If you are making any significant expenditure, it is necessary to discuss it with your partner which leads to a judicial decision. It helps to decide whether the allocation of money being done by you is justified or not. Significant expenditures from either one of you can impact your shared financial security. Therefore, it is essential to talk about your budget limits prior to making any big purchases.

• Utilize advantages provided by financial institutions: Financial institutions and banks provide many financial advantages to couples. Some of these benefits are increased credit limits on joint credit cards, joint bank accounts for easy financial planning, advantages in interest rates on home and vehicle loans, etc. Moreover, couples receive tax benefits on some joint investments. You can utilize these advantages to boost your savings.

• Sustain a positive credit rating: Your credit scores are very important which are influenced by lenders evaluations of your creditworthiness. Your good credit score influences your chances of securing loans. As most of the people need different kinds of loans, like Home Loan, Vehicle Loan, Education Loan etc., it is advisable to keep a good credit score. You should also settle your credit card payments timely to have good credit scores.

Bottom line

Financial planning is a very important part of handling your finances and fulfilling both your long-term and short-term objectives. It also helps you in directing you towards your saving strategy which provides you with the advantages of handling various situations. It needs experimentation to find out what suits you best. It’s essential to discuss how you want to handle bank accounts, everyday expenses, and budgeting. When a couple decides to merge their finances but deceives each other regarding money matters, it may create a dispute between partners. Being honest in sharing a budget can help to lead a happy married life.

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